The Brown Earth Pig Dreads A Spring Stock Market Bath

I continue to have Raymond Lo’s analysis in my mind.

This quote ties nicely with the stock market:

“Pig is the stage when fire is “Terminated” and the fearful water element is going to take over.  As water symbolizes fear, there is lacking of optimism in the Pig year and it will bring decline in economic growth and activities leading to longer term setback of the stock market and more economic crisis will come up.”

Over the weekend, I wrote about an anomaly between the Russell 2000 (IWM) and Transportation Sector ETF (IYT).

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“While the Granddad Russell 2000 IWM gained in price, the Transitional Transportation IYT sector, struggled, closing down on the day…”

Today, both ETFs declined, which is good news for direction, but bad for stock market bulls.

I have also included a link to my interview with our mascot in the photo-Mr. Ham the pig.

I learned that Hammy hates water. As this year has a water element, once Hammy gets his spring bath, he predicts so will the market.

What are IWM and IYT telling us?

IYT, on the left, shows the two weeks above its 50-WMA and then the close below it last week.

iyt iwm stock market etfs investing analysis news march 4

Plus, today, IYT started out back slightly above the 50-WMA (sitting at 189.71), but selling off to break it later on. 

Also important on the daily chart is Friday’s low at 187.67. As it closed slightly below, perhaps today is the first rinse in a major bath that is on the way.

IWM did close above its 50-week moving average (blue line) last week, making that two weeks in a row.

However, today it failed that level at 157.19. 

Furthermore, on the daily charts, IWM failed the 200 DMA putting from an accumulation phase back into a recuperation one.

Now that we have IYT and IWM more in concert with one another, it proves that IYT is smarter than Granddad IWM. 

So now what?

Although most pigs actually like water, Mr. Ham in this Year of the Pig, does not because of the fear-inducing water element. 

Keep your eyes on these two economic Modern Family members, while you watch what Mr. Ham has to say here.

S&P 500 (SPY) – Friday’s low 278.83 held. That minimized the ugly bearish candle and keeps the bulls alive for now. 281.31 swing area resistance 

Russell 2000 (IWM) – Failed 157.86 a pivotal place to close above or below but did manage to hold Friday’s low as well at 156.75

Dow (DIA) – Could not clear 262.36, so working a topping pattern and put in a much nastier bearish candle than SPY did

Nasdaq (QQQ) – It gapped over 174.66, put in a new high and close ok. 172.22 still the place to hold

KRE (Regional Banks) – 55.98 support with 58.31 the 50-WMA resistance above. 

SMH (Semiconductors) – Until 106.27 clears though, it is still working off a topping pattern with 102.50 support to hold.

IYT (Transportation) – Keep 189.61 in your mind as the ultimate weekly pivotal level to hold or not-plus 187.67 a daily pivotal level or Friday’s low.

IBB (Biotechnology) – Held up ok making 112.40 the place to hold

XRT (Retail) – 45-46 the trading range to break near-term

Twitter:  @marketminute

The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.