Weekend Update: When the Stock Market Drops a Leaf in Your Lap

The stock market had a strong week, thwarting off a noisy news schedule.

Let’s review key price levels on the major stock market index ETFs, along with this week’s market theme.

S&P 500 (SPY)   Don’t argue with new all-time highs with no overbought indication. 285 support.

Russell 2000 (IWM)  New all-time highs with 171.50 nearest pivotal number

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Dow (DIA)  258.70 recent all-time high to clear. 255 the underlying support

Nasdaq (QQQ)  182.65 resistance has become even more palpable with Friday’s high 182.63. Through there should go higher. Under 180 troublesome

Regional Banks (KRE)  63.28 the 10 DMA support

Semiconductors (SMH)  Unconfirmed bullish phase with 105.66 the 50 DMA

Transportation (IYT)  205.25 resistance with 202.00 support to hold

Biotechnology (IBB)  117-now the pivotal support area

Retail (XRT)  51.50 near-term pivotal support.

Real Estate (IYR)  82.00 area support to hold

Consumer Staples (XLP)  54.00 area good nearby support to hold

Gold Trust (GLD)  Filled the gap on the weekly chart so now, around 113.20 should hold if good

Uranium (URA)  Consolidating at and around the 12.50 support area.

US Oil Fund (USO)  Broke out from the bullish flag on the weekly chart making 14.20 the support now to hold

Each is imprisoned to an idea and an identity.

Isn’t this the ultimate dilemma of the discretionary trader?

If there is a lesson to be learned from the bronze sculpture, it’s that when a leaf falls into one’s lap, one should examine both its simplicity and complexity.

To learn more about how I see the leaf and trade accordingly, please come to Tuesday’s FREE webinar at 8 PM ET.

In the market, traders imprison themselves continually to an idea and an identity.

Good traders spend the time thinking about both the simplicity and complexity of the market.

In any given day, I see staunch bulls and bears.

I see predictions of a ginormous crash and for the Dow to run to 30,000.

I see one man’s treasure interpret as another man’s trash.

This week’s rally fell into trader’s laps.

Yet, the simplicity of that eludes those who are imprisoned by focusing only on the complexities.

The good traders embraced the gift that fell in their laps.

Indeed, whether one is imprisoned to a glass half full or empty, the market is like that leaf.

As we contemplate the leaf on our laps, what for this week looks simple, and what looks complex?

Simple is that with the S&P 500 and the Russell 2000 at new all-time highs, both small caps and fortune 500 companies are robust.

Simple is that regardless of the political environment, the market reflects the strength of the US economy.

Simple is that the U.S leads the global economy.

Complicated is that supply may outweigh demand as seen through the price retreat in the Transportation sector.

Complicated is that the strong dollar buys the US consumer more, but makes exporting goods more expensive.

Complicated is that the inflation numbers could really go either way-towards hyperinflation or deflation-this is a true wild card.

Sometimes though, a leaf is just a leaf.

If so, then the impact of the complexities will become more obvious, hence turning into simplicity.

Furthermore, the simplicity of the indices at or near all-time highs will either become more simple or sell-off and enter the realm of complexity.

For now however, we are grateful for the obvious leaves yet wonder how they will change color in the fall.

Will Transportation hold up? Will the dollar weaken? Will commodites firm from here or fail? Will the indices continue to rally?

Do not imprison yourself with any idea or identity. See the leaf for what it is at the moment. Then, adapt accordingly.

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

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.