Is the Current Stock Market Rally Sustainable?

stock market correction over now rally to new highs chart analysis investing news

This past week dip buyers saved the market from breaking lower. 

The Retail Sector ETF (XRT) and Regional Banking Sector ETF (KRE) have cleared back over resistance from their 50-Day moving averages (DMAs) followed by the Biotech Sector ETF (IBB) clearing back over its 200-DMA.

However, the small-caps Russell 2000 ETF (IWM) and Semiconductors ETF (SMH) are still underneath their 50-DMA.

Luckily, they are holding support from their respective trading ranges.

Moreover, SMH is back within its trading range from mid-March, while IWM has been stuck roughly between $215 and $230 for over 3 months.

With that said, the next positive sign to look for is follow-through from new buyers in the coming week.  

If fresh interest does not enter the market, we could be looking at a choppy situation as the market tries to find its direction. 

Furthermore, from a trading standpoint, this leaves us with a few options as a choppy market can flip direction quickly.

  1. Take trades with profit targets that do not require the market to run to new highs. 
  2. Look to diversify from equities into some commodities. Therefore, you are not constrained by overall market action.
  3. Watch the U.S. dollar as it is under threat to break down further, which could reignite inflation fears. 

Of course, there is always the option to do nothing if you want to wait for more market clarity. 

Part lesson and part actionable information, Mish takes you through the longer-term moving averages plus gives you a bunch of long and short picks. See the latest Stockcharts TV segment here. 

Is The Market Correction Over? Mish goes through the economic modern family and outliers. Plus, the outliers or the influences on the markets such as the bonds, the dollar, and gold. 

Stock Market ETFs Analysis & Summary:

S&P 500 (SPY) Cleared the 10-DMA at 415.51.

Russell 2000 (IWM) Support 215.

Dow (DIA) Cleared 342.96 the 10-DMA. 

Nasdaq (QQQ) Watching to clear back over the 50-DMA at 326.52.

KRE (Regional Banks) 71.82 resistance. 

SMH (Semiconductors) 233 pivotal area. 

IYT (Transportation) 282.40 resistance. 

IBB (Biotechnology) 147.05 support. 

XRT (Retail) Cleared the 50-DMA and the 10-DMA at 92.94.

Twitter: @marketminute

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

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