This Is Not a Buy and Hold Stock Market Yet

Michele Schneider

I will continue to write more about the Year of the Pig and what that means for the stock market.

If you missed my weekend update, check it out here.

However, since I did not cover the weekly charts on the Modern Family as I have customarily done, let’s start the week with this view.

Looking at the chart below, from top left to right:

The Russell 2000 ETF (IWM), Transportation Sector ETF (IYT), Retail Sector ETF (XRT).

From bottom left to right: Biotechnology ETF (IBB), Regional Banks ETF (KRE), Semiconductors ETF (SMH)

economy focused stock market etfs follow analysis february 2019

So much bullishness.

Is it warranted?

Beginning with Russell 2000 (IWM), 150 was a good point to clear. What is daunting though, is that unlike the climb to new highs, this rally has to come face to face with resistance on every leg up.

Plus, the 50-week moving average (blue) remains well overhead with a slightly negative slope. The phase is still caution.

If we use 150 as pivotal, should the rally start to fade, it will begin with a move beneath there. Then, I would expect another test of 145.

The Transportation Sector (IYT) has a similar scenario. Resistance exists up to the negative sloping 50-WMA. 180.50 is the pivotal area to hold.

Retail (XRT) is the only sector in a distribution phase, or under the 200-WMA (green.) XRT must clear 44.70 and hold, or it could be a drag.

Biotech (IBB) was the only sector to close above the 200-WMA. That mkes 109.93 a very clear pivotal point. Above bullish, below caution.

Regional Banks (KRE), has the steepest negative slope in the overhead 50-WMA. Plus, the resistance at 55 is palpable.  52 will be the support to hold if this begins to fade.

Semiconductors (SMH) is not too far away from its overhead negatively sloped 50-WMA. Will it make it there? Possibly. But watch what happens from there as that could be a great place to short. Conversely, must hold 95.00

Put it all together, this is not a buy and hold market, and definitely not at these levels. Enjoy the ride, but tighten the stops and think a lot about risk/reward before going long.

S&P 500 (SPY) – 269 is pivotal support. 271-272.65 is the overhead resistance.

Russell 2000 (IWM) – 150 pivotal support to hold. The 148 must hold. 151.25 resistance

Dow Jones Industrials (DIA)  – 249.85 the 200-DMA a good pivotal point to watch

Nasdaq (QQQ) – 166.75 is support to hold. 170.15 the overhead resistance.

KRE (Regional Banks) – 53.00 pivotal support 55 resistance

SMH (Semiconductors) – November high before the crash was 99.13. 95 now key support.

IYT (Transportation) – 180.59 support to hold 187.65 resistance overhead.

IBB (Biotechnology)  – 109.92 the 50-WMA and now pivotal

XRT (Retail) – Weak and cannot clear the 200-WMA-with 2 inside weeks. Today it is still trading inside the range of the last 2 weeks. 44.61-43.55 the range to break one way or another.

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.

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