Like Vampires, a Stock Market Bear Has to be Invited In

Michele Schneider

Vampires cannot enter private human homes unless they are invited in by the owner of the house.

In the case of public places however, vampires require no invite. 

Humans can rescind their invitations to vampires, which causes the vampire to immediately leave the house.

Such has been the case for stock market bears and the homes of the bulls.

Occasionally, like Friday, they get invited into the Bull’s home, only to see that invite rescinded as none of the phases deteriorated from bullish.

So, while we may see Bears wandering about in public places, their impact on our personal portfolios or our homes, very much depends on how much equity in stocks we have at risk.

This week, the way to avoid getting bit was by diversifying your equity holdings with bonds, gold or the volatility index. 

If you had those instruments in your portfolio, you had no temptation to invite the Bear in.

However, if you are in the camp of the “market will never go down”, then you might have unwittingly invited that Bear in figuring you could uninvite him before he bites you on the jugular.

Thus far in the current market environment, the Bulls, if threatened after inviting a Bear in, only had to open the shades and let the sun in.

What equity Bulls need to examine for the coming week, is whether the Bear hunts them down in public places or if any invitation they give to a Bear to enter their home, is so easily rescinded.  

The Economic Modern Family’s home could be under siege. 

Are they about to fall under our vampire bear’s spell yet again?

stock market correction analysis etfs chart february year 2020

Here are the weekly charts of the Economic Modern Family.

Imagine if you will, a vampire bear knocking at the door of each of the six squares.

Now, let’s think about how much risk each member is of getting bit should they invite the bear in.

Top left is our superstar Sister Semiconductors SMH. Interestingly, she had an inside week or traded within the range of the prior week. That means the vampire is at the door, but not quite inside her living room.

Should SMH break under 142.50, she’ll succumb to the bloodsucker.

Middle top is Big Brother Biotechnology IBB. Clearly, this has had a relatively strong performance this week. Under 119.80 IBB is at risk. 

Far right top is Granny Retail XRT. She did well this week comparatively. Although the December 2019 highs of 46.57 elude her, if she holds over 44.00 that means the garlic she wears around her neck is helping her stay alive.  

Bottom left is Transportation IYT. On the Daily chart, IYT had to hold the 50-DMA at 195.92. IYT closed one cent below.

On the weekly chart, although he looks a bit broken down, he has room to fall before his life is at risk.

Bottom middle is Prodigal Son Regional Banks KRE. Unless he breaks 54.00, the weekly bull trend is intact.

And far right bottom is Granddad Russell 2000 IWM. 165.80 is the 50-DMA which he held. On the weekly chart, with the close over 167, he not only keeps the bears outside his portal, he is the best one to protect everyone else should he remain above 167.

For now, with all the indices in positive phases and most of the sectors as well, our vampire bear hovers patiently by the door because of what the low yields, high gold prices and growing volatility suggest to him-easy pickings.

Two recent links to check out:

On July 12-13, 2020, I will be speaking/teaching at the Modern Traders Summit in Philadelphia. Only 5 speakers, which means attendees will get a lot of attention, I hope to meet many of you there:

S&P 500 (SPY) Failed the 10-DMA which makes 336 the resistance to clear and 330 support. 

Russell 2000 (IWM) 165.80 support, 167 pivotal and 169.50 resistance 

Dow Jones Industrials (DIA) Closed right below the 10-DMA at 293.60-now pivotal  

Nasdaq (QQQ) Fell to the 50 DMA and held 288.20 now support to hold

KRE (Regional Banks) 56 resistance and 54.05 support.

SMH (Semiconductors) 144 the support to hold and 148.75 resistance.

IYT (Transportation) 195.92 pivotal for Monday.

IBB (Biotechnology) Inside day. 121.29-123.65 range to break.

XRT (Retail) Inside day. 45.12-46.24 range to break.

Volatility Index (VXX) Unconfirmed Recuperation phase making 14.66 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.