The Stock Market Gypsy That Lives By Her Own Rules

It was a noisy week for the stock market and traders.

Here’s a look at key price levels, along with my weekend update:

S&P 500 (NYSEARCA:SPY)  278.40 the closest support. 280.41 March highs. That still far from the January highs at 286.63.

Russell 2000 (NYSEARCA:IWM)  166.90 is the 10 DMA to hold and back over 168.38 better.

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Dow (NYSEARCA:DIA)  250 pivotal

Nasdaq (NASDAQ:QQQ)  New highs again. 178 the closest support.

Note that you can catch me this coming Wednesday, July 18th at 4 PM EST.  I am the kick off speaker for a wealth365 Summit event called “The Ladies of Wall Street.

Each day brings so much news. More than most anyone can handle.

However, one story really caught my attention last week.

Last Thursday, July 12, Jerome Powell, the Fed Chair, gave an interview.

He said, “I sleep pretty well on the economy right now.”

Yet, he also said that recent trade policy actions could alter the Fed’s plans to continue to raise short-term interest rates.

Like our wistful gypsy posed under a broken clock, he went on to say, “We don’t know. It’s very hard to sit here today and say which way that’s going.”

What caught my attention is his worse-case scenario.

“You can imagine situations which would be very challenging, where inflation is going up and the economy is weakening.”

I’ve not only imagined it, I’ve written about that possibility for quite some time.

Nevertheless, stagflation, recession, or a market that continues north driven by this frightening statistic:

“Amazon, Netflix and Microsoft together this year are responsible for 71 percent of S&P 500 returns and for 78 percent of Nasdaq 100 returns”

Like a gypsy woman, the next big move could be “the secrets of her dark eyes..”

Who knows?

Let’s look at the usual suspects.

Beginning with NASDAQ, or the most crowded index populated with the fewest prime choices, the week ended on new all-time highs.

S&P, similarly crowded, also ended well, just shy of the 2018 high 280.41 made in March.

The Dow got back over 250—our terror zone.

The Russell 2000, or Granddad of the economic Modern Family, ended lower for the week.

With potential double tops at 170, IWM needs to hold 166.64, last week’s low and the fast moving average. Otherwise, as best measure of the US economy, it could hurt.

As you know, IWM has 5 sectors in his family to consult the gypsy’s crystal ball with.

Of those, we see division.

Regional Banks, reflective of the health of community banks and related to rates which fell, is in a warning phase. And, KRE is dangerously close to failing the 200 DMA.

Sister Semiconductors (SMH) are also in a warning phase. The 105 level should be pivotal for Monday.

Most importantly, Transportation (IYT) survived the 200 DMA. Nonetheless, compared to the Russell’s, it is stil in a warning phase. The overhead 50 DMA has an upward slope, therefore it is a weak warning phase.

Granny Retail and Biotechnology are in bullish phases. Speculators have returned big time to the biotech sector. IBB is our family’s big brother. That speculative flow should not be ignored. Unless, they turn out to be the last bull’s standing.

XRT (Retail) resurrected from the nearly dead in April. We can credit the fact that brick and mortar is taking a lesson from our gypsy-more vibrant and personalized.

Stores like Nordstrom’s are experimenting with offering manicures, and serving beer, wine, and coffee.

Oh yeah, and a gypsy dance when requested.

With 3 sectors flashing warning, while 3 flash bullish, Powell spoke the truth. We just don’t know.

Like a gypsy-the market lives by its own rules.

This coming Wednesday, July 18th at 4 PM EST, I am the kick off speaker for a wealth365 Summit event called “The Ladies of Wall Street.”

I will show you where I’m looking for the next big trade. Plus, show you how you can identify, and methodically profit from, the market’s best trends on your own in the future!  Check it out right here! 

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.