Stock Market Bulls: You Call This a Rally?

Sure, the stock market rallied on Friday ahead of a long weekend and after a significant selloff.

Yet, dogs, who typically look straight into their human’s eyes for a lead, now glance incredulously to the side.  

Wisely, these dogs have their doubts about following their humans into fresh equity longs in the market.

These dogs ask, “You call this a rally?” 

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Let’s look at the charts next? (see further below)

Although we see a bounce, particularly in the Regional Banks ETF (KRE) – bottom left) and the Biotechnology ETF (IBB) – bottom middle) off the 200-weekly MAs (green line), none of the other members did very much to show real strength.

Half of the Family remained in the red. The Semiconductors ETF (SMH), Transportation Sector (IYT), and Retail Sector (XRT), could not hold onto early gains. 

This does not engender a vote of real confidence.

On the other hand, with KRE and IBB holding onto key support, we will watch for their lead come Tuesday.

So, equities may have had their shallow rally on Friday. 

But some commodities posted greater gains, and with better than average volume.

CORN, for example, gained over 2% as the plains are flooded and the window of opportunity to plant more is diminshing.

Coffee and sugar closed higher, along with the cotton, beans, wheat and gold. 

Hence, Memorial Day marks the first of the dog days of summer.   

So before you play knick knack paddy wack and give your dog a bone, make sure you are following the correct old man that comes rolling home.

Last Thursday, Bob Lang of Explosive Options and I, got together to discuss the market and all of the potential implications. While you’re mowing the lawn, soaking up the sun or taking a hike, have a listen here:

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S&P 500 (SPY)  – If cannot clear 284.50, then look for a move to around 277 is where the next major moving averages sit. 

Russell 2000 (IWM) – The 3/25 low was 148.41. Significant? Only if it holds. 152.50 good resistance.

Dow Jones Industrial Average (DIA)  – 253.40 is the 50-week MA. If that fails, besides IWM, it will be the second but not the last index to break that level. Resistance at 257.00.

Nasdaq (QQQ)  – If this cannot get back over 179.85, then 174.40-174.60 is the test of the underlying MAs. 

KRE (Regional Banks) – 51.36 the 200-WMA holding. As it closed green, look for some follow though above 53.00 if that should clear.

SMH (Semiconductors) – 102 the big resistance with 99.00 some support.

IYT (Transportation) – 180 next best support with 184.50 resistance.

IBB (Biotechnology)  – 103.26 the 200 WMA pivotal with 105.37 resistance.

XRT (Retail) – 42.12 broke. Now resistance to clear.

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.