Stock Trading Update: The Market’s Night Music

Wednesday saw stocks push higher once more.  So what should we watch today?

Let’s review key price levels and themes:

S&P 500 (NYSEARCA: SPY)  Still far from the January highs at 286.63. 280 is now pivotal

Russell 2000 (NYSEARCA: IWM)  Still waiting for a move up over 170 and into new highs. If not, then this is the rally to sell as it has made 3 lower highs and could not clear the reversal topping pattern from June 20. 166 support held in the clutch again today. That’s your line in the sand

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Dow (NYSEARCA: DIA)  250 held quite well. Resistance at 255.75.

Nasdaq (NASDAQ: QQQ)  180 pivotal.

Nothing like a little night music to lift the spirits.

After threats and worries, we heard words of harmony and reconciliation.

The EU will happily remove tariffs.

Putin will not visit the U.S. until 2019.

Farmers will receive aid.

It was enough good intention-after all, none of it is actual news yet-to make the market happy.

Transportation came back over the 50 daily moving average to post an unconfirmed phase change to bullish.

Earnings reports are moving along well enough-unless you are looking at Chrysler or General Motors. They both got hit hard.

With policy intentions actively tweeted, Twitter (TWTR) performed well ahead of Friday’s earnings.

And FANG stocks proceeded to do what they do, provide music for the revelers. At least until Facebook (FB) reported and fell over 6% at time of writing.

The NASDAQ 100 reversed from its potential topping pattern to soar to yet another new all-time high.

Nevertheless, not everyone got up and danced.

Why not?

Have you checked out the Homebuilders sector lately?

itb homebuilders stock etf decline bearish chart july 25

Here is a weekly chart of ITB, the Homebulider ETF that has 48 companies in its basket.

ITB, which deals with home construction, is down -12.56% year-to-date.

Lennar Corp (LEN) its top holding, is a dance away from rallying from or failing its 200-week moving average.

ITB is in a Caution Phase on the weekly chart. Although not in the Modern Family, this trend down is noteworthy.

Joining the wallflowers is our dear Sister Semiconductors (SMH). Today, SMH tried to get up and dance.

Although the late headline about all is well in the trade waragain helped her stumble to the dance floor, SMH remains in a caution phase.

There are more benchwarmers.

The dollar (UUP ETF) fell. This is pertinent as inflation two-stepped on the dance floor with the help of agriculturals, especially wheat, soybeans and corn, and oil.

You do not want to see commodities rise while the dollar falls.

Furthermore, you do not want to see a more dovish FED in that scenario.

So, while the band plays the “Trump Secures Concessions from the EU to Avoid a Trade War,” that song is just as hyped as all the rest of them have been.

Night frolickers, please continue to watch the dollar, rates, semiconductors and yes, the Russell 2000 as well.

If Gramps gets jiggy with it and clears 170, good. If not, the market could still be in for its last dance.

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.