Stock Market Update: Transports and Russell 2000 Go Head-to-Head

The stock market paused and consolidated on Tuesday.

Let’s review key price levels on the major stock market index ETFs, along with today’s market theme.

S&P 500 (SPY)  288.90 area now the immediate support to hold. In fact, if the gap down to 287.67 does not get filled, looks like that runaway gap. Subscribers: Positive Pivots in all except IWM

Russell 2000 (IWM)  Calling 171.62 pivotal and under 171 can see 169.76

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Dow (DIA)  Like to see this hold 260 now for best results

Nasdaq (QQQ)  182.65 underlying support if cannot hold 184. By the way, this too has a runaway gap-not as impressive as SPY-but still…

KRE (Regional Banks)  Like that it held above the stop and over 63.50 should resume move up

SMH (Semiconductors)  Broke the lower highs pattern today. So that’s good for now

IYT (Transportation)  205.25 pivotal area-a few cents above or below not really that significant-closing levels matter more

IBB (Biotechnology)  117-now the pivotal support area with 120 big resistance

XRT (Retail)  51.50 near-term pivotal support area.

To learn more about how I use the Dow Transports ETF (IYT), along with pivotal prices and phases, please come to tonight’s free webinar at 8 PM ET.

After making new all-time highs Monday, the Russell 2000 digested those gains on Tuesday, closing basically unchanged from Monday’s closing price.

On August 21st, I featured the Russell 2000 after, “That pattern of lower highs will negate once this clears 169.76.” cleared.

Since IWM did not close under Monday’s low of 171.62, bulls do not have to worry about a topping pattern at this point.

Furthermore, I featured Transportation IYT yesterday with these comments,

“With IYT, above 205.25, the bias remains friendly, although it still needs to clear the ATH of 206.90 to negate the topping pattern.

Beneath 205.25, we have a neutral bias, unless IYT breaks under 202. Then we get more negative.

And under 200, we will consider the potential that IYT has made a double top.”

With IYT head-to-head with the Russell’s, who has the advantage?

Going to head-to-head, the action between IYT and IWM is really neck-and-neck!

IYT made a low today of 205.09 and closed back above 205.25. Who says the market is not technical?

Going into Wednesday, the same pivotal numbers apply. IYT ideally needs to hold around 205.25. And even more ideally, it needs to clear 206.90.

With August nearly gone and a long weekend ahead, IWM may do more work between 171 and 172.94, yesterday’s high.

That consolidation would be helpful to follow up or down, depending the way it reconciles.

If IYT continues to trade below the pivotal point, then we will look more closely at IWM to hold 171 for sure. If not, IWM might test the breakout area of 169.76.

If IYT holds above the pivotal number, then the chance of new highs increases. IYT still needs to clear 206.90 though.

However, there is a wildcard in the family that could be setting up for much higher levels-Granny Retail XRT.

We could call her the arms that our sculpture is missing.

After 3 days correcting from its all-time highs, I would watch XRT to resume the rally, especially if it clears back over 52.00.

The key level for XRT to hold is 50.00. Bias shifts should the price break under that level.


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.