It’s Only A Manufactured Bear
Last week, so many aspects of the market appeared manufactured.
The comments by the Federal Reserve when they used the term “maybe.” The idea that although like tigers, solitary by nature, the Fed was squeezed into a “streak” or a man-made group of tigers. The result? Dovish talk.
Or when the market rallied “Furthur” to new all-time highs after tripping and boarding the magical bus across the country along with the Merry Pranksters.
Then, since the market’s magical 3-layer cake was baked with only a very loose cake batter, the saturated, sponge cake top layer fell off in the small caps, leaving the gooey custard middle.
Furthermore, it kept us wondering if the bottom or the fudge-like layer would be tested and if so, would the cake rebuild like magic all over again?
Therefore, even though the Dow, S&P 500 and Nasdaq 100 all closed positive, is it any surprise that the market would end last week nervous about a plastic mama bear and her cub?
Real or manufactured? What will next week look like?
The Modern Family, our antithesis to the Merry Pranksters, offered clues all last week. For the upcoming and final week of February, those clues should continue to offer us real tidbits.
The Russell 2000 (IWM) held the 50 daily moving average and the January 6-month Calendar Range high. However, it failed the top of monthly channel and the resistance level of 140-140.50.
What might we expect? Since volume has been relatively light on the sell side, provided it can hold around 136 and over 138 even better, maybe not new highs, but at least a dance around current levels.
Transportation (IYT), also held the 50 DMA and January Calendar Range. It closed green, again with overall light volume.
Retail (XRT), after a slew of earnings, some better than others, hung in there. Nevertheless, announcements like JC Penney (JCP) closing 140-150 stores or a just-above junk rating for Macy’s (M) means eat cake, but without lighting any candles. XRT did close green.
Biotechnology (IBB) held right in the price zone it needed to. That makes it easy. Under 285 worrisome. Over 290-291 should take it back to spongy.
Regional Banks (KRE), in another low volume move, held above the January Calendar Range high. So did Semiconductors.
5 of 6 Family members respected that very important 6-month January Calendar Range high. The Retail exception, at least held the 6-month low.
And our plastic fantastic mama bear and cub?
They may have spotted not a 3-layer magic cake, but the yellow kind. URA, the ETF for uranium, sold off hard until Friday. Then, on more than triple the average daily volume, URA reversed course and held critical support.
So, while everything in the market is either baked, processed or manufactured, we’re loving those GMOs.
S&P 500 (SPY) 240 still in focus with 234.75 support
Russell 2000 (IWM) 139 is the pivotal number to watch end of month. And today held key support at 138
Dow (DIA) 20,821 in the DJIA. 206 key support.
Nasdaq (QQQ) 129.35 support
KRE (Regional Banks) 57.00 support held
SMH (Semiconductors) 77.35 key resistance level with 76.50 support
IYT (Transportation) 166.50 support and back over 171.15 good sign
IBB (Biotechnology) 285-287 pivotal support tested and held with an inside day.
XRT (Retail) 42-43 ultimate support-over 44.20 would be remarkable
IYR (Real Estate) Over a 5-month base so looks pretty good if holds over 79.00
GLD (Gold Trust) Nearly got to 120-if long probably good to take profits.
SLV (Silver) Slow and steady-17 pretty much max risk with 17.50 strong resistance
GDX (Gold Miners) Weak compared to the metals.
USO (US Oil Fund) Amazingly sideways.
TAN (Solar Energy) Inside day-over 19 looks like could see 19.50. 18.50 now support
TLT (iShares 20+ Year Treasuries) 120 pivotal. 123 big resistance
UUP (Dollar Bull) 25.80 support 26.25 resistance
Disclosure: None.