Unchain My Bullish Heart

Funny, when Keith and I took a walk to town the other day, we saw this bronze sculpture.

Chained, so nobody can walk away with a 400 pound bronze bull, we thought it potentially symbolic.

Today in the market, someone tied a link chain around the bull’s neck and then padlocked it.

It all began with the Dow reaching 26,000.

Whereas I suspected a gremlin on the wing of the plane at 25,000 might appear, he hid in plain sight until 26,000.

Poetic justice on the plane analogy, I have written over and over that you all should keep eyes on Transportation (IYT), the Tran sibling of the Modern Family.

At 10:07 AM EST, I tweeted, “Keep eyes on $IYT-got to 206 and a bit beyond, just like when $SMH went to 106 and a bit beyond-$IYT now red-wouldn’t be surprised to see more profit taking-with $200 now the first point to hold-then reevaluate.”

By 3:00 PM, Tran (IYT) traded down to $201.63. The indices followed.

The question on everyone’s mind, “Was today the top?”

I traditionally use 5 different chart indicators to find tops.

  1. An island top. Not applicable in the indices as the gap was filled from the new highs intraday.
  2. Double tops. Again N/A-new highs not matched at this point.
  3. New highs, close on the intraday lows accompanied by double or triple the average daily volume-not really, although volume was huge. The indices closed lower, (except for the Dow), but not on their intraday lows.
    NOTE-IWM did close in the bottom 25% of the intraday low-caution
  4. After new highs, a second day close under the reversal day lows-too soon to know.
  5. Blow off top-similar to number 3, huge volume brings the instrument to new highs and then, with everyone trapped-items 1-4 can happen-let’s call this a maybe.

Since the most likely one to play out is number 4 or 5, we do have to wait another day. After all, we have seen this market roar back on fresh buying each time it has corrected.

Best place to keep eyes?

Transportation for sure. Then, Semiconductors, as SMH reversed on November 22nd and has not cleared those highs since.

Should SMH fail 100 and then 98.75, trouble.

Next, Biotechnology. If speculators sell IBB off below 107.50, not pretty.

I would also watch the dollar, interest rates and the metal or inflationary indicators.

Finally, good ‘ole Granddad Russell 2000 (IWM.)

The recent euphoria was supported by the move up in IWM after it had lagged for so long. However, best place to see if the economy is overheating besides in Transportation?

Never give in to the temptation to become market ageists. Gramps knows all and always will.

S&P 500 (SPY) It would take a close under today’s low or 276.18 to get overly concerned

Russell 2000 (IWM) Today’s low 155.80 is the place to watch. Otherwise, possible back over 157.66, today was a one-day blip.

Dow (DIA) I’d say 256.48 is the real place to hold or the low of last week’s runaway gap.

Nasdaq (QQQ) 163.53 today’s low with 162 support below that