Who is surprised that the two sectors of the Economic Modern Family that broke over the inside week trading ranges are Semiconductors SMH and Biotechnology IBB?
And, who is surprised that the sectors that did not break over their outside week’s trading ranges are everybody else?
Like a total rinse, wash, repeat, the buyers came into tech and pharma, and although the others saw buyers in sympathy, their gains were not enough to clear last week’s highs.
Nor, were their gains enough to clear the outside week’s trading range high from 2 weeks ago.
What do we need to see now?
I am not trying to appear negative.
However, this pattern of a run in NASDAQ, the S&P 500, and Tech while the Russell 2000, Retail, Transportation and Regional Banks all struggle, is all too familiar.
There’s the high yield corporate buyers and then there’s the “inside” of the market.
Yes, it’s true the market is forward thinking and reacted well to a flattening of the death rate and news that OPEC will meet on Thursday.
But it is also possible that this forward thinking is too optimistic and running well ahead of itself.
So, to remain totally objective, here is what has to happen.
First off the Russell 2000 has to clear last week’s high 113.15, then the outer week’s high 117.60.
Transportation IYT has to clear the outside week high 145.52 and hold 140.72, last week’s high.
Retail XRT has to clear last week’s high 30.43 and then the outside week’s high 31.63.
Regional Banks KRE has to clear last week’s high 33.59 and then the outside week’s high 34.73.
As for the two areas that outperformed?
Semiconductors SMH has to clear the 50-week moving average at 123.30 (and stay there).
Biotechnology IBB has to hold 109.54, its 50-WMA.
The medical news has to remain on the side of a flattening curve.
And the economic damage, which is palbable to most of the country, has to prove that it will be more temporary than what many fear it could be.
S&P 500 (SPY) 258 support, 264.49 pivotal and a move near 290 if gets there-a short (retraced to the MA breakdown)
Russell 2000 (IWM) 112.56 pivotal
Dow Jones Industrials (DIA) 225.87 pivotal
Nasdaq (QQQ) 190 support and a move to 200 area a short
KRE (Regional Banks) Tied to oil. 32.00 nearest pivotal area
SMH (Semiconductors) 122 pivotal and a move to 127 a short
IYT (Transportation) 140.52 pivotal
IBB (Biotechnology) 112.75 resistance. 110.00 support
XRT (Retail) Inside week 31.63-26.29 range to watch
Volatility Index (VXX) Inside week-59.01-39.00 range to watch
Junk Bonds (JNK) Inside week. 95.98 resistance 83.18 support
LQD (iShs iBoxx High yield Bonds) 120 pivotal support-a move to 125.50 area a short
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.