The Year of The Fire Rooster

Regarding the economy, fire element is often the driving force behind the stock market.

In general, fire is joy, water is fear, earth is meditation, metal is sadness, and wood is anger. As such, fire years often generate optimism, which is good for the stock market.

For example, the last financial tsunami happened in 2008 because it was the strong water year of the Rat. According to Raymond Lo, the economic crisis deepened and continued until 2012 because all these years did not have fire element.

When fire returned in 2013 with Snake year, the US economy showed strong recovery. In 2014, a strong wood fire horse year, the Dow Jones industrial Average surpassed 18,000.

For 2017, the Yin Fire is still positive for the economy and optimism continues to bring confidence through the spring and summer.

When we examined some characteristics of the rooster last night, we learned that they must resist the urge to overthink (sweat the details) or they might lose sight of the overall picture.

But what if the Devil is in the details?

As much as optimism prevails in the stock market, the opposing voices of concern cry out equally loud.

Interestingly, in Chinese astrology, the industries that will perform well in the year of the Rooster will be industries related to Fire and Water elements.

Fire industries are energy, the stock market, finance, and entertainment.

Looking at the ETF for Energy (XLE), it entered an unconfirmed bullish phase today. The price returned above the January 6-month calendar range low. The calendar range high sits far from current levels at 77.00.

The Water element refers to transportation, shipping, and communication.

Transportation (IYT), surpassed its January 6-month calendar range high today. Provided IYT can hold 166, the likelihood of much higher levels from here is good.

On the flipside, or the devilish details if you will, the year of the fire rooster also brings predictions of many natural disasters such as fire, explosion, and nuclear issues.

Furthermore, Lo says we should expect environmental disasters and disease epidemics to continue.

If any of the aforementioned shake the market’s optimism, our fire rooster could wind up running around like a chicken without a head.

The overwhelming sense I have is that the market, mainly bought up by financial institutions and corporations, will go even further to widen the already wide divide between the roosters and the hens.

Wednesday, the 3rd in my series on the Chinese New Year, we will explore the bubble (water element) that might put out this fire later this year.

S&P 500 (SPY) Not quite new all-time highs, which is at 228.34, but close. Concerning? Only if SPY breaks under 226.50

Russell 2000 (IWM) 135.50-136 pivotal area. Still has a way to go to reach the highs

Dow (DIA) Nearest support 198.50, but really, everyone waiting for 200

Nasdaq (QQQ) New all-time highs now 123 pivotal support

KRE (Regional Banks) 55.10 nearest support to hold. The 54

SMH (Semiconductors) 74.00 pivotal support to hold as this goes to new highs

IYT (Transportation) 166 key pivotal support. 16170 resistance

IBB (Biotechnology) Then there’s this. 274 resistance

XRT (Retail) 43.90 pivotal resistance

IYR (Real Estate) A close this week over 78.25 would be interesting

GLD (Gold Trust) Must clear 116 to keep going. Hold 114.50

SLV (Silver) 16.00 pivotal support 16.50 resistance

GDX (Gold Miners) 23.00 pivotal area. 24.10 resistance

USO (US Oil Fund) Wasn’t really interesting other than the hammer doji day

XLE

OIH (Oil Service Holders) Great move. Looking for follow-through above 34.35

TAN (Solar Energy) 18.00 key

TLT (iShares 20+ Year Treasuries) 120.25-119.50 is the support this rally took off from. If holds has legs, if not, expect to see TBTs hold over 40.00.

UUP (Dollar Bull) 25.80 support held perfectly