New Cracks In The Bull Market Are In Plain Sight
Today's commentary was written by Geoff Bysshe, co-founder of MarketGauge.
If there was any doubt that the market is still addicted to central bank stimulus, this week made it clear that stocks do not suffer disappointing central bank news lightly.
Our Fed’s “as expected” announcement was uneventful, but the BOJ’s refusal to announce new levels of easing as expected sent global markets lower.
While the week’s slide may seem inconsequential, there are some potentially serious weaknesses in the bull trend developing as a result.
In addition to this commentary I’ve prepared this week’s Market Outlook video with more detailed analysis of the general markets and sectors including our Triple Play and Real Motion indicators.
There are two major conditions to focus on.
The QQQ is leading the market lower, but the IWM has been leading on the upside and remains in a healthy corrective mode.
As a result, a reversal to the upside in strong areas of the market can be followed, but until such a reversal occurs the market is in a corrective mode.
S&P 500 (SPY) Stopped at 205 as Mish suggested, next key support levels are 202 and 200. On the upside, 207 and 207.50 are important levels to break and hold in order to get bullish.
Russell 2000 (IWM) This is the leader to watch. Friday’s range can be used as the range to break to determine the next direction.
Dow (DIA) Look for support at 175 and 174. Key level to break to move higher is 178.33
NASDAQ 100 (QQQ) This is the leader of down days. The first sign of strength is a break and hold over 106.70. Next level of support is 103.50 area.
Volatility Index (VIX) If you want to play the market’s down side, this is set up nicely with a stop under 16.20.
XLF (Financials) Held nicely at the 200 DMA and prior swing highs. If it’s good it should hold Friday’s low.
KRE (Regional Banks) Back under the 200 DMA, but the key number to hold is 40. Resumption of the up trend begins if it breaks 40.70.
SMH (Semiconductors) 53.70 was a huge level of support and it’s not well below it. So now it’s likely to be a ceiling. 52 is a big area now that Friday’s low, the 200 DMA and 100 DMA are all in the area.
IYT (Transportation) Stopped right at the 140 level Mish mentioned. Friday’s range can be used as the range to break to determine the next direction.
IBB (Biotechnology) Failed to hold the 270 level, but stopped around the 50 DMA. Friday’s range can be used as the range to break to determine the next direction.
XRT (Retail) Failed to hold the important level of 44.50, but Friday’s range can be used as the range to break to determine the next direction. The next big support is the 43 area.
IYR (Real Estate) Nice late day bounce off the 50 DMA level around 75.70. Keep an eye on this one if the market moves higher.
GLD (Gold Trust) Big breakout. I wouldn’t chase it. There will likely be more upside in the future that you can catch with more definable risk.
SLV (Silver) Higher again. Very extended short term.
GDX (Gold Miners) Still running and nearing the 200 week DMA for the first time since it broke below it in 2012! That breakdown was at double today’s prices.
USO (US Oil Fund) Current level of 11.40 should be resistance. Next resistance level is 12.25. Should be good support at 10.80.
TAN (Guggenheim Solar Energy) 25.20-.30 is huge resistance and it’s no longer benefiting from higher oil prices. Looks stuck.
UUP (Dollar Bull) 24.20 low of 2015 is broken. 24.40 will now be big resistance with the next big support all the way down at 23.15!
***Market Tone: Short-term Positive 2 Intermediate-Term Positive 5 Long-Term Positive 7
NOTE: *All starred picks are from the automated list of picks (which now includes short picks!) denote that it has one or more of the 18 chart patterns we have used on the radar screen. For example, inside day, 2 days under floor trader pivots, phase change, brick wall or return to the 10 DMA, etc.
Longs
ACAS**
ADBE**
ADSK**
AEM**
AGQ
AIV**
AMZN
AON**
APA
ATI**
AVP**
AXLL
BIDU**
CDE
CLR
CNQ
CTXS
CX
DDD
DG**
DNR
DTE
DUK
EMN**
EW
EXPE**
FBHS**
FCX
FLS**
GDX**
GDXJ
GG
GNW**
HES
HLF
IPG**
KSU**
LEG**
LVLT**
MNST**
NEM**
NFX
NWL**
RRC**
SBGI**
SCSS**
SPN**
TEX
TSLA
UPRO**
WHR**
YUM**
Shorts
AAL
AAPL
BBBY
DXJ**
ERJ
GILD
GNC
ILMN
JWN
MYL
NFLX
NTAP
REGN
SNY
STX
TSO
UAL
VRTX
VRX(E)
WDC**
WNR
