Stock Market Bears Await Sector Unity or Further Disharmony

Michele Schneider

I am inches away from declaring the next major trend.

But will it be up or down?

Sure, we saw new highs this week in the Dow, S&P 500 and NASDAQ 100.

Sure, we have the Federal Reserve striking a more dovish tone on rates.

Sure, we are at full employment, minus the increasing labor participation rate. And, sure we are at the Fed’s inflation target with today’s CPI numbers.

Sure, the tariffs and lack of a plan with China exists… and sure the US now threatens tariffs on the EU.

Sure, we have an increasing debt with no way to pay it back.

Sure, we have more defaults on car loans.

Sure, mortgage applications have not risen in the face of lower yields.

Sure, we have tentative relations with Iran.

There’s the maze of fundmentals.

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What do we need from the technicals, particularly the economic Modern Family?

Here are the weekly charts. 

The blue line is the 50 week moving average or about one year of data.

The green line is the 200 week moving average or about 4 years of data.

With the exception of Semiconductors SMH, they all look rather precarious.

Semiconductors is in a bullish phase on the weekly and daily charts.

That is positive, however, there is solid resistance just overhead.

So, although it’s a whole lot better than the other Modern Family sectors, SMH is telling us that there remains speculative hesitation, even in the strongest part of the economy.

The biggest concerns besides IYT giving up today’s gains tomorrow, are in brick and mortar Retail XRT and the Russell 2000 IWM.

Should IWM fail to close the week above 154.50, that tells me that the troubles outweigh the dovish statements by the Fed.

XRT is in a bearish phase on the daily chart and a distribution phase on the weekly chart.

Lots of folks discount this weakness because of online sales. Yet, there are issues with this sector concerning employment, real estate and consumer confidence as related to GDP.

So when I say, “I am inches away from declaring the next major trend,” look at the bear in the photo dangling an AI robot.

If the Family joins in, the next move will be to the upside, and substantially so. Maybe even that 30k in the Dow.

Nevertheless, if the Family does not join in, that Bear will roar, drop the robot and we are looking at one nasty downturn.

S&P 500 (SPY)– 299.66 printed a new all-time high. Today it got close but could not clear before turning down. 296.50 pivotal support. 

Russell 2000 (IWM) – 154.50 is the major pivotal 50-WMA to hold. 158 resistance. 

Dow Jones Industrials (DIA)  – 270.75 the new all-time high. 267.95 pivotal.

Nasdaq (QQQ)  – 193.34 the new all-time high. 190 support.

KRE (Regional Banks)  – Unconfirmed Recuperation phase. 53.66 the 200 DMA now the next resistance to clear. 

SMH (Semiconductors)  – 115.70-116 resistance. Support at 111.25 to hold.

IYT (Transportation) – 188.50 key to clear again while 186.44 and then 185.74 the key points to hold.

IBB (Biotechnology)  – Weakened phase back to unconfirmed Recuperation. 109.50 now resistance and 105.35 support.

XRT (Retail) – Confirmed bearish phase. 42.45 pivotal area-has to close above 43.15. Support at 41.75

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.