Did the Stock Market Flip or Did We Kick a Dead Horse?

Last night we wondered which arrow Cupid’s got up his wing.

The one to arouse a stock market rally or the one to ignite aversion?

If we imagine this horse as the stock market correction, then Cupid’s arrow should restore her to her feet.

We have carefully tracked the Semiconductors ETF (SMH) as it has been the strongest of the weakest of the economic Modern Family sectors.

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We noted that SMH is below the 50-WMA, but not by that much.

Therefore, that SMH ran up over 4.10% Tuesday is not surprising.

It grazed the top of the 50-week moving average and settled at 102.14

Can Cupid’s love arrow keep our sister SMH filly on all four legs?

SMH needs to close the week back over the 50-WMA at 101.63.

The main point is that while the Russell 2000 ETF (IWM), or worse, the brick and mortar Retail ETF (XRT), significantly failed the weekly moving averages, the Semiconductors (SMH) held up relatively well.

Now, we have seen this before. SMH leads, the others follow for a time, but then, the Family sectors depart from one another’s price action.

Therefore, before we look at today as anything more than a dead cat bounce, we must see IWM or Transportation IYT, hold onto today’s gains.

Particularly with IYT, we are encouraged by the reversal and the double the average volume.

Nonetheless, we want to give this a bit more time before we can assess if this is the work of the immortal Cupid, or if we are merely kicking a dead horse.

Every Tuesday and Thursday, I will be on KKOB radio at around 6:15 PM mountain time (8:15 PM EST) to discuss markets and market news. https://www.iheart.com/live/770-kkob-5411/

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S&P 500 (SPY)  – 277 now support. Unconfirmed Caution phase-281.50 resistance now.

Russell 2000 (IWM) – 148.40 now support with 151.65 last week’s high resistance.

Dow Jones Industrials (DIA)  – 254.35 the 200 DMA resistance.

Nasdaq (QQQ)  – Unconfirmed Caution Phase with 174.25 super pivotal.

KRE (Regional Banks) – 51.40, yesterday’s resistance was today’s low and now support.  Overhead resistance now at 53.50

SMH (Semiconductors) – Unconfirmed Caution Phase with 101.63 super pivotal and 101 best underlying support. Resistance at 102.75

IYT (Transportation) – 178 now support 183 resistance and 181.25 pivotal.

IBB (Biotechnology)  – This is pushing right up against the 200-WMA. That makes 103.15 area pivotal.

XRT (Retail) – 42.12 the major resistance with now, 41.30 pivotal.

Twitter:  @marketminute

The author 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.