The Stock Market Smokes Through a Smoke Screen

Michele Schneider

Perhaps my favorite stock market tidbit of the week comes from Paul Tudor Jones.

“I see the younger generation hampered by the need to understand and rationalize why something should go up or down. Usually, by the time that becomes self-evident, the move is already over…”

He goes on to say,

“These days, there are many more deep intellectuals in the business, and that, coupled with the explosion of information on the Internet, creates the illusion that there is an explanation for everything—the primary task is simply to find that explanation.”

Finally, and to the point I wish to make,

“As a result, technical analysis is at the bottom of the study list for many of the younger generation.”

Paul and I were on the NY Commodities Exchanges at the same time. With very little access to real time news or fundamental analysis, we used price action to guide us.

I became a chartist and followed the patterns like religion.

He became a billionaire, but that’s another story!

This has been a financial news driven week that without charts, might have driven the younger generation nuts.

Among the highlights:

Netflix earnings and the subsequent price collapse.

NY Fed President Williams talking rate cuts and the subsequent slap on the wrist.

The Federal Reserve signals the possibility of a ¼ point rate cut in July.

A huge decline in the economic leading indicator primarily driven by weaknesses in new orders for manufacturing, housing permits, and unemployment insurance claims.

Overanalyze this market and you will not only be confused, but possibly doe-eyed and incapable of making a trading decision.

With that said, it’s that time again. Time to go to the weekly charts on the Economic Modern Family, plus a look at the silver to gold ratio.

Is the market smoking through a smoke screen?

Overthinking youngsters, let the Modern Family of ETFs make it simple.

If you are feeling doe-eyed, it should be because of how mixed the Family is.

Beginning with the Granddaddy Russell 2000 IWM, it sits on the 50-WMA like my 13-year old dog sits in her dog bed. Ready to awake for a treat, but otherwise stuck asleep.

Regional Banks KRE continues to trade between the 50 and 200-WMAs.

Transportation IYT had a range expansion week. However, it is holding the 50-WMA.

Granny Retail XRT and Biotechnology IBB, are stuck in trading ranges, albeit in negative phases.

And then there is our superstar sister, Semiconductors SMH. Of course, if she holds or not will depend on her brethren.

On the silver to gold ratio, last time I reported on this, silver was still trading at a 90-year low to gold. Clearly, that ratio reversed, just as we anticipated it would.

Plus, silver traded at a new yearly high. I anticipate with all the rush into the futures, it could spend some time digesting this move. Furthermore, should geo-political situations heat up, gold will overpower silver, at least for a little while.

Nevertheless, what the metal bulls got to see, is just how explosive gold and silver can be, especially with the mixed and uncertain news.

Yes, that’s the same news that gives the younger generation pause and the older generation that knows about charts the opportunity to act and act fast.

Now that I think about it, that’s like thinking you are saving your lungs smoking a vape rather than a cigarette through a smoke screen.

S&P 500 (SPY): Could not get through 300 and now must hold 295 underlying support. 

Russell 2000 (IWM): 154.30 is the major pivotal 50-WMA with resistance at 155.35. Underlying support at 153 

Dow Jones Industrial Average (DIA): 273.99 all-time high. 270.75 pivotal support still holding

Nasdaq (QQQ): 192.25 pivotal area. 188 next area of support

KRE (Regional Banks):  Unconfirmed Accumulation Phase which makes 53.40 pivotal. 52.80 key area to hold. 

SMH (Semiconductors):  115.70-116 now pivotal area of support 117.88 next resistance. 

IYT (Transportation): 188.35 is the number to hold should this break under 190.

IBB (Biotechnology): 105.20 the 50-DMA pivotal area to get back above. Unless it clears, 103 in focus.

XRT (Retail): Major support at 42.45 must hold.

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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