An Orderly Stock Market in a Disorderly World

Michele Schneider

The title is meant to illustrate that the market might seem orderly, but the world as we know it has changed.

Or, at the very least, the old rules may no longer apply.

Global growth is slowing, while awareness that the U.S. is not immune, is evolving. And it’s showing up in the price of the S&P 500 (SPY), Russell 2000 (IWM), Nasdaq (QQQ), and other key sector ETFs in the market.

Traditional economics would suggest that if growth slows, commodities fall further in price.

I don’t think so.

That paradigm has shifted.

Why?

First, the reiteration this week that the central banks the world over have no issue with a “forever-til-further-notice” policy of artificially low rates.

Secondly, with global currencies weak, the other eventuality, that the U.S. can lose its stature as the world currency.

Yet, like with all predictions, they only matter when there is proof of their fruition.

So yes, I have keen eyes on commodities, as per the 03-07-19 blog called “Can Commodity Prices Rise?”

On Friday, gold, and the metals soared. The ags and softs though? 

Not so much.

And in the meantime, we also need to watch equities and particularly the Modern Family. They’ve not steered us wrong yet.

stock market etfs trading bearish price trend analysis week march 10 outlook

The weekly charts show the strengths and weaknesses of the Family.

As I have mentioned in the past, a Family in concert is much more compelling than one in discord.

On the top left, Granny Retail had a rough week. The blue line or 50-week moving average, turned out to be significant resistance. So much so, XRT failed the 200-WMA (green line) as well with last week’s sell off.

Middle top chart is Regional Banks KRE. Likewise, KRE could not clear the 50-WMA. However, what we need to watch for now, is if KRE sells off more to test the 200-WMA. Or, if it holds these levels, chops around and perhaps tackles the 50-WMA again.

Far right top is Granddad Russell 2000 IWM. After 2 weeks above the 50-WMA, this week it failed, testing key support around 150.

Bottom far left, Sister Semiconductors remains the shining star, or Captain Marvel if you will. SMH closed above the 50-WMA. If the market holds, the momentum there should improve rapidly.

Bottom middle is Big Brother Biotechnology IBB. Yes, public. You tend to buy high and sell low. Now 110 is resistance. And after 5 weeks above the 50-WMA, Friday it failed it.

Last but not least, Transportation IYT, failed the 50-WMA last week and signaled the selloff elsewhere early this week. Friday, it came close to the 50-DMA and held.

Note though that all but XRT are above their 20-WMAs. Hence, the selloff can still be considered a correction and not necessarily the top. Not unless XRT fails to retake her 200-WMA and the others begin to narrow their distance between current price and their 200-WMAs.

Fundamentally, I maintain that regardless of the next immediate market direction orderly or not, do open your mind to a disorderly world.

The bubble or impact of constant QE and weaker global currencies can very well lead to stagflation.

Just the sort of ironic pickle our reactionary world leaders will find frustrating and futile to impulsively react to. 

Note:Next week I will be attending a conference with Geoff and Keith. There will be published levels but no Daily commentary. I will tweet as time permits. 

S&P 500 (SPY)  – 274.83 the 200-DMA was the closing level I was looking for to hold. It failed it by the skin of its teeth. That makes it pivotal for Monday 

Russell 2000 (IWM) – 153 now resistance.  150.95 the weekly EMA support held so now pivotal.150 underlying support

Dow Jones Industrials (DIA)  – 251.33 the 200-DMA support. 256.20 resistance this would have to clear and close above

Nasdaq (QQQ)  – Cleared back over 170.58 the 50-WMA. 172.30 the 200 DMA pivotal resistance. 

KRE (Regional Banks) – 54.21 the pivotal weekly EMA ultimately held. 

SMH (Semiconductors) – 100.50 is where its best support sits-or at its 50-WMA which held. Back over 102.50 a relief

IYT (Transportation) – This failed the EMA, 50-WMA, 200-DMA but held the 50-DMA-so a bounce given the other key areas that were held in the indices and Family is likely. Resistance 183.50

IBB (Biotechnology)  – Held 108.82 the weekly EMA support and if can get back above and close over 110-way better

XRT (Retail) – 44.60 the 200-WMA resistance

Twitter:  @marketminute

The authors 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.

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