The Stock Market’s Biplane That’s Missing a Wing

This biplane flew overhead yesterday.

Initially built by the Wright Brothers, the biplane was used mainly for military and commercial aviation from War World I until the 1930’s.

The plane used two wings because the engines were not powerful enough for liftoff using just one wing.  

Such is the case with the stock market.

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In order to maintain liftoff since reaching new all-time highs in the S&P 500 – NYSEARCA: SPY, Dow Jones Industrials – NYSEARCA: DIA, and NASDAQ 100 – NASDAQ: QQQ, the market also needs a biplane.

Without the economic Modern Family all on board, the impact of these recent all-time highs puttered out today, just like an engine would that requires two wings to stay afloat.

One wing remains the stronger sectors such as Semiconductors.

But the missing wing is where the other five Family members sit.

For starters, ironically enough, the Transportation Sector – NYSEARCA: IYT – fell sharply after its one-day wonder move yesterday.

I guess those thermal currents that helped the Transportation Sector IYT soar, died down today.

(Actually, poor earnings in CSX a railroad company, was the catalyst).

Below is the weekly chart of IYT. Note how the Transportation Sector failed just below the 50-week moving average or the blue line at 188.29.

That makes it simple.

For the market to hold up or reinstate the other wing, IYT has to not only hold clear and hold above that price level, but also begin to ascend back above the clouds.

As far as the other Family members, the Russell 2000 IWM also sits on its key 50-WMA. 

Retail XRT has failed to hold above resistance. Semiconductors SMH are still resting. Regional Banks KRE are back in a bearish phase.

And, Biotechnology made a small bounce off the 50-DMA. 

Modern biplane designs still exist in specialist niche roles such as aerobatics.

Exactly like our economic Modern Family-they exist in special niche roles and are capable of major market aerobatics.

S&P 500 (SPY) – 298.75 pivotal support broke today. So, if it cannot get back above there and hold, then could see 295 next level to hold. 

Russell 2000 (IWM) – 154.55 is the major pivotal 50-WMA still. 

Dow (DIA)  – 273.99 the new all-time high. 270.75 pivotal support still holding.

Nasdaq (QQQ)  – 194.19 the new all-time high. 192.15 pivotal support marginally holding.

KRE (Regional Banks) – Unconfirmed Bearish phase. That makes 52.80 key area to clear for this to recover. Watch support at 51.80

SMH (Semiconductors)  – 115.70-116 resistance. Support at 112.25 to hold.

IYT (Transportation) – No phase change, however, it must get back in the game or we will see it fail 185 soon.

IBB (Biotechnology)  – 109.15 now resistance and 105.35 the 50-DMA pivotal support.

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.

Editor’s note July 17, 2019 4:40pm CST: The article was updated to reflect the correct author, Michele Schneider.