Weekend Update: I’ve Got the Market on a Swing

Investors endured a bout of volatility this week as stocks declined (and at times sharply).

Before we get into our theme and trends, let’s review key levels across the major stock market indices:

S&P 500 (SPY)  286.50 support to hold (or we will see 283 next) with a move back over 289.50 better

Russell 2000 (IWM) 170 big support to hold, which it did end of day. If that breaks, we are looking 168.30 the 50 DMA.

Dow Industrials (DIA)  259 pivotal support to hold

Nasdaq (QQQ) 179.50 is the 50 DMA to hold. However, this is the one index most vulnerable as it had a legitimate reversal pattern after making new all-time highs. If it can get back over 184.25 area, way better

Regional Banks (KRE) Like to see this continue to hold 62.45 and clear 64.00

Semiconductors (SMH)  Unconfirmed warning phase. If holds 105.50, we can easily see this clear back over 106 and hold. If not, 104.50 next support area.

Transportation (IYT) Broke the fast-moving average and is either going to hold and close back above 205.50, or fail 202 and then 200, which could mean a double top.

Biotechnology (IBB)  115-116 next area of support and 120 now becomes the pivotal resistance3

Retail (XRT) 50.44 is the 50 DMA. I haven’t given up here yet.

Note that you can get daily trading ideas and market insights over on Market Gauge.

So, it’s really “I Got the World on A String”, a hit song sang by Frank Sinatra.

Some feel like the current market and its wild swings, often prompted by the guy who has the world on a string, is like “sittin’ on a rainbow.”

Others feel that the guy who “can make the rain go, anytime he moves his finger”,is more like “what a world!”

Rainbows or torrents, last week the market rattled both the bull’s and the bear’s nerves.

Stocks such as Roku, the company that manufactures digital media players, had nothing but rainbows as it soared to new all-time highs.

So did Costco (COST), Aetna (AET), Union Pacific (UNP), Eye Opticals (EYE), an optical retailer, and O’Reilly Automotive Parts (ORLY).

Whereas Applied Materials (AMAT) and Randgold Resources Limited (GOLD) had nothing but rain, as they made new all-time lows.

Companies like Ford Motors (F) and JC Penney (JCP) made new multi-year lows.

And, some of the best multi-year performers were in the cannabis industry. One example is Canopy Growth (CGC).

Other multi-year high performers were Kohl’s (KSS), Advance Auto Parts (AAP) and Ulta Beauty Inc. (ULTA).

I wish I could give you a discernable pattern of what is weakest versus strongest, but as Sinatra crooned, if I could “I’d be a silly so and so..”

Looking at the macro picture, the week ended negatively in all the indices.

Most striking is the contrast between how NASDAQ and the Russell 2000 did last week versus the week before.

Both made new all-time highs 2 weeks ago and sold off sharply last trading week. However, neither changed phases to warning, although QQQ is close.

In the Modern Family sectors, Semiconductors (SMH), did change phases, ending the week in an unconfirmed warning phase.

It needs to close a second day under the 50 daily moving average to confirm.

Nevertheless, it’s not panic time yet.

SMH has not closed-key word closed-under the 50-week moving average since May 2016.

That level to watch for this week is around 103.60. Plus, the indices and the rest of the Family are in Bullish phases.

Again, the man pulling the strings will help determine whether the market has rainbows or torrents.

Although, please note that nobody is bigger than the market. Therefore, please continue to watch price.

That way, you can have your own trading world on a string that will help you reconcile the swings.

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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