Looking Under the U.S. Equity Market’s Glittery Hood

Michele Schneider

The low rider trend in New Mexico incorporates some very fancy paint work on the body of some cars.

Most of the low riders are older cars, enhanced with springs to make them bounce, plus with exterior designs that make heads turn.

I particularly liked the glittery paint job on the hood of this 1985 Cadillac. And it relates to today’s stock market update.

The stock market also disguises an older bull engine with a glittery and fanciful hood.

Last night I wrote, “With inside days in Retail XRT, Regional Banks KRE, and Biotechnology IBB, we have a course for you to follow on Wednesday.”

We also noted that the Russell 2000 (IWM) rallied, while the distribution phase confirmed.

Examining the charts of the members of the Economic Modern Family of ETFs, what does it look like under the stock market’s hood?

I suggested you follow the way the range breaks in the Regional Banks ETF (KRE), Retail Sector ETF (XRT) and the Biotech Sector ETF (IBB). And to follow IWM to see if it can clear 154.50 or if it fails 150.75.

IBB’s marginally reconciled to the upside. Yet, it remains under the 200-WMA (green).

KRE’s initially reconciled to the downside, but then railled back. It closed red and under the 100 DMA.

XRT neither reconciled to the up or downside. Interesting, as retail is the weakest link in the Family.

IWM rallied. Nevertheless, it neither improved in phase nor cleared key exponential moving averages on the weekly chart.

As for the rest, IYT Transportation did not improve from its distribution phase, keeping 189.80 as resistance.

Semiconductors SMH also did not improve phases from its caution phase on the Daily chart. However, it outperformed just as we thought it would. And it is the only one in the Family that’s in a weekly bullish phase. 

Here is what we expressed over the last couple of days. 

“If SMH holds firm, there are opportunities in that sector to trade.”

Now, with the Family still divided between the ornamental glitter on the hood and the older, more corrosive parts under the hood, I’d continue to trade equities light and tight!

Reminder: Most of my work comes from the Economic Modern Family and Market Phases. All of this is covered in my new book – Plant Your Money Tree: A Guide to Growing Your Wealth!

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S&P 500 (SPY)  – Confirmed the caution phase. That makes 285.93 the 50-DMA super pivotal with 277.30 the 200-DMA next support.

Russell 2000 (IWM) – 155.30 resistance while in a confirmed distribution phase, 150 is the next support area.

Dow Jones Industrials (DIA)  – This managed to clear the 200 DMA at 254.27 and improve in phase to an unconfirmed caution phase.

Nasdaq (QQQ)  – The 50-DMA is at 183 now pivotal.

KRE (Regional Banks) – 54.20 resistance with this in a confirmed bearish phase. 51.31 the 200-Weekly Moving Average.

SMH (Semiconductors) – Confirmed caution phase. 110.45 resistance.

IYT (Transportation) – Confirmed distribution phase with 189.50 resistance and 183.80 support.

IBB (Biotechnology)  – 103.40 the 200-WMA resistance and 100 next best support.

XRT (Retail) – Under 42.12 expect more weakness. A move over 44.35 a miracle.

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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.