Stock Market Outlook: Russell 2000 Spurs Holiday Rally

Michele Schneider

In early November, in an interview with stockcharts.com, David Keller and I talked about the “Economic Modern Family” of stock market ETFs and how they seriously lagged the major indices.

However, there was one exception – our Sister Semiconductors ETF (SMH).

We went on to say that should in particular, the Russell 2000 (IWM) wake up, the rally in the S&P 500 (SPY), Nasdaq 100 (QQQ), and the Dow Jones Industrials (DIA) would be exponential. 

Furthermore, it would be the healthiest sign for the stock market since September 2018, right before the 20% sell off.

So here we are with 2019 almost over.

My economic Modern Family of ETFs is for the most part, enjoying huge gains.

As we review the weekly charts, one sector has yet to show its enthusiasm.

And for perspective, all the other Family members besides SMH, are still far from the September 2018 highs.

What should we prepare for in 2020?

The all-time high in the Russell 2000 IWM is 173.39. With current levels at 166, yes, IWM has to keep up his energy and holiday spirit.

Regional Banks KRE, an integral member of the Family, is holding above its base at 57.50-that’s a line to watch. If KRE fails there, we have seen our Prodigal Son throw water on rallies before.

stock market rally leadership russell 2000 bullish chart image december 21

Transportation has a lot more to prove to us. Movement of goods, people, and services measure “demand.” If IYT cannot move out if its base over 200.00, I’d take that as a warning.

Granny Retail looks better. And Friday, with GDP unchanged, we look for her to show us that consumers are feeling the love. After all, with huge consumer debt but a slight rise in wages, look at the base she needs to crawl her way above. 2019 high was 46.93. Granny has yet to clear 46.00. Sobering at best.

Biotechnology had an inside week. However, it did break above its weekly base at 116.20. So a good sign here as bulls pause, yet stay the course.

Finally, we see Sister Semiconductors SMH power to another new all-time high. The tech boom is real. 

Projections for more tech growth by 2030 include huge percentage gains in electric vehicles, 5G mobile, and the number of devices connected to the internet. 

However, these projections on cyclicals assume continued consumer demand. Therfore, watching Granny, Tran, Granddad and Regional Banks will either confirm or deny those projections. Or, at the very least, they will tell us if the production of all of this tech can be supported by consumer demand. 

I mention this because 45% of Americans have zero money saved. How much more can they be stretched? 

When euphoria or the greed index runs rich, as we are seeing now, I like to go to my Family. They are for the most part, older, wiser and way more reflective of reality.

I will have one more Daily on Monday the 23rd for this year. I will review the megatrends both young and old, plus begin a look see at the Chinese Year of the Rat.

Happy Hanukah!

S&P 500 (SPY) 317.70 or the 10 DMA support. 321.97 new all-time high. 

Russell 2000 (IWM) 164.03 support with 165.10 pivotal.

Dow Jones Industrials (DIA) 282.20 the support with a ATH at 285.06 

Nasdaq (QQQ) 207.75 or the 10 DMA support 212.52 new ATH.  

KRE (Regional Banks) 57.52 support, 59.50 resistance.

SMH (Semiconductors) Want to see this hold 140.93, then 139.30 support. 143.97 the ATH.

IYT (Transportation) 195 is still key pivotal area with 192.35 key support. 200 key resistance.

IBB (Biotechnology) 120.40 support 122.97 the 2018 high.

XRT (Retail) 45.41 cleared now pivotal. 46-47 resistance.

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.

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