Stock Tales: A Midsummer’s Night Market

Monday saw the major stock market indices hold up pretty well, but there’s a lot going on.

Let’s review key price levels and themes:

S&P 500 (NYSEARCA: SPY) Still far from the January highs at 286.63. Must hold 277.00

Russell 2000 (NYSEARCA: IWM) If this does not move up over 170 and into new highs, then this was the rally to sell as it has made 3 lower highs and could not clear the reversal topping pattern from June 20th. 166 support.

Dow (NYSEARCA: DIA) 250 pivotal.

Nasdaq (NASDAQ: QQQ) 180 pivotal, especially with the GOOGL run after-hours

Titania, Queen of the Fairies in Shakepeare’s comedy, awakes from the after effects of a magic potion and says, “What vision have I seen! Me thought I was enamoured of an ass.”

With the summer market so slow, and in the face of lots of news and this week, earnings, one can feel like one is equally enamoured.

Falling in love ahead of an earnings report, like the one that happened recently in NetFlix, can certainly make anyone feel like an ass.

Falling in love with a market in the midst of so much controversial news, delivered ad nauseum daily, ditto.

Falling in love with a market until the Russell 2000 (IWM) can make new all-time highs, ditto ditto.

So, what’s to love?

Surely, will this summer, like in Midsummer’s Night Dream, have a happy ending?

3 of the 4 indices closed green on Monday.

The holdout, the Dow, is managing to hold onto the 250 or the 25,000 level thus far.

The Modern Family was mixed. Always a reason to pay attention.

Transportation and Regional Banks did well, so well that Regional Banks closed in an unconfirmed bullish phase while IYT (Tran), confirmed its bullish phase.

That matters, as both indicate strength in demand and in community banking, which translates to local business and housing demand.

Of course the interest rates rose, which helps the banks.

Yet, Biotechnology and Retail closed red. One (IBB) is heavy with speculators, the other (retail) is a factor in the upcoming GDP.

And, Semiconductors (SMH) closed in an unconfirmed warning phase or just beneath its 50 DMA.

Furthermore, despite the strength in IWM, it still has yet to revisit 170. Monday’s high was 169.15.

Once again, the fairy magic lies with FANG and NASDAQ. With Alphabet (GOOGL) reporting well, we assume a higher open at time of writing.

So, if you find yourself in love with one insturment only to wake up to find yourself surprisingly enamoured with a more bizarre one, notch it up to a mischievous fairy who likes to play pranks on mortal traders.

Tomorrow at 6:30 PM EST, I will give a free webinar on How to Profit From the Hottest Areas of the Market In the Second Half of 2018.  To register please click 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.

Sign up for our FREE newsletter
and receive our best trading ideas and research