Fire Rooster Struts At The SPY’s All-Time Highs

Photo by Barry Naiditch

Mr. Fire Rooster stops dead in his tracks. He becomes paralyzed whenever he hears someone repeat the Chinese astrological prediction for the conclusion of the Year of the Fire Rooster:

“Serious setbacks towards October will bring a long-term bearish market as there is no more fire years before the Tiger year 2022.”

Turns out, what fuels our fire rooster even more than his innate need to be in the limelight, is the fear that he may not be in the limelight. The astrological predication of a sustained bear move coming, aligns well with the philosophy of The Five Stages of Disbelief. (Also known as the Five Steps of a Bubble.)

With our Rooster crowing at the Senate vote to pass the budget thereby opening the door to tax reform, the Dow had not one, but two runaway gaps. I’ve been waiting for the last of the bears and cash rich investors to throw in the towel and buy. Once the last skeptics believe that the fire rooster will do anything to keep the cockling going, we could finally see the blow off rally we’ve patiently waited for. And then the burnout? One encouraging sign that the rally to the top is nigh is with Granny Retail. A while back, I called her Resuscitation Granny. She surely deserves that moniker again.

Looking like XRT would crash below 40 and head way lower, instead, XRT held 40 and closed back above the 50-DMA. With a confirmation of the Recovery Phase, possible that XRT provides the rocket fuel for the blow off. Our Prodigal Son, Regional Banks (KRE), became more lavish after it cleared 57.00 last Friday. Should KRE hold above 56.50 as we learn who the next Fed chairman will be, there’s another rocket launcher in the works. 

As mentioned last Thursday, Big Brother Biotechnology (IBB), a political football, has until October 31st before we know whether it will hold the critical 327 level or not. The Russell 2000, an old cod and not so easily impressed by the Rooster’s crow, sits close to the recent highs at 150.68. Yet if IWM encourages the bears to “believe” then, along with XRT, KRE and IBB maintaining its bullishness, they most likely will. If not, the Year of the Dog is up next. Funny thing, Roosters should be afraid of dogs, but they’re not.