Market Overview

Modern Family, "Are You Squiding Me?"

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Like a cake, the ocean has different layers—each with its own characteristics. (No icing, though.) The surface layer receives the most sunlight, allowing photosynthetic organisms like phytoplankton to convert sunlight to energy. Interestingly, this layer is the smallest one or only 5% of the average ocean depth. (Little room at the top!)

The twilight zone receives only faint, filtered sunlight, allowing no photosynthetic organisms to survive. This layer includes about 20% of the average ocean depth.

The deep ocean gets no sunlight at all. "Constantly in the darkness, where's that at?" (Joni Mitchell) Figures that layer is the largest one with 75% of the average ocean depth. Credit to The Smithsonian Institute!

Where am I going with this?

The 3 layers that I wrote about last week, the 2015 Trading Range, the July 6-month Calendar Range and the Cycle of Instrument Phases can be substituted for the 3 ocean layers-considering our Octopus and where the 8 arms wind up.

After Thursday's session, all 4 indices remain well within the 2015 trading range-let's call that the deep ocean. Furthermore, let's hope those 2015 lows are as solid as the ocean floor.

If we look at the twilight zone layer as the July 6 month calendar range one, the Russell 2000 and Dow are below the faint, filtered sunlight (trading below that range) heading for the deep ocean, while the S&P 500 swims somewhere near 10% below the surface layer. NASDAQ has just entered the Twilight Zone and still has a chance to swim up.

Concerning Phases, if we look at those as the surface layer, only NASDAQ is enjoying full sunlight at this point. The rest have deteriorated in phases, ranging from Warning (SPY) to Distribution (DIA IWM).

Maybe not a perfect analogy, but considering our octopus and the Modern Family arms, fun nonetheless.

The Octopuses two rudder arms Transportation (IYT) and Semiconductors (SMH) could still keep the rest of the market afloat as both could be showing signs of a bottom. Semiconductors are real close to a death cross which in some ways is good news as with the cycles of phases, it could complete the deterioration and work its way higher.

Transportation is already moving up in cycles defending the Recovery Phase.

Finally, that severed arm-commodities. Oil Service Holders (OIH) and the Energy Fund (XLE) rallied off their lows. As an Octopus's arms do grow back, watch for confirmed signs of regeneration.

Our Modern Family turns out to be an invertebrate living among the ocean layers-how simple!

S&P 500 (SPY) Unconfirmed warning phase. 204.11 the July low with 207.30 the 200 DMA and 210 resistance

Russell 2000 (IWM) Closed under the July 6 month calendar range so unless gets back over 121.20 area, broken.

Dow (DIA) 174.44 is the July 6-month calendar range low and it closed just under it.

Nasdaq (QQQ) Held the 50 DMA so best hope

XLF (Financials) 25.35 next point to clear with 24.94 point to hold-also in a bullish phase

KRE (Regional Banks) unconfirmed warning phase. Looks like its going to 42.75 level next

SMH (Semiconductors) support around 51.00, which held end of day

IYT (Transportation) Performing well and now must hold over 148.50

IBB (Biotechnology) Thought this looked tired and now in an unconfirmed warning phase

XRT (Retail) Express train to the 200 DMA-let's see if 96.65 can hold

IYR (Real Estate) Even with the crazy session, kinda liking this

XHB (US HomeBuilders) 36.66 support

GLD (Gold Trust) Needs a sharp reversal pattern to avoid lower prices.

GDX (Gold Miners) Almost got interesting but ultimately still very weak

USO (US Oil Fund) Another new 2015 low and maybe some support going into Friday

OIH (Oil Services) Where it was at on Thursday and now must hold 30.14

XLE (Energy) A possible reversal if holds 66.29 and clears 68.43

XOP (Oil and Gas Exploration) Nice look for a reversal here too. Has to confirm

UNG (US NatGas Fund) If holds of 13.00 ok to still watch and like over 13.75

TAN (Guggenheim Solar Energy) Looking for a new 2015 low

TLT (iShares 20+ Year Treasuries) 120.57 major support and 124.40 the 200 DMA resistance

UUP (Dollar Bull) Rest but not a deal breaker

EWW (Mexico) Could be basing with an inside day above the 10 DMA

FXI (China Large Cap Fund) 40.00 pivotal

CORN (Corn) Maybe trying to hold here over 23.00

The following article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: Technicals Trading Ideas

 

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