May 24, 2017
By Geoff Bysshe
Today was a good example of the physics principle, “an object in motion, stays in motion…”
The markets follow this concept in many ways – momentum, trend lines, moving averages, phases, etc.
Today 13 out of the 14 sectors tracked in our sector summary table traveled in the same direction as their phase. The one sector (IYT, Transportation) that did the opposite only moved .1%. You can use the link below to see the actual table.
This is a good example of why we pay so much attention to Market Phases. They work well.
Today, the markets waited patiently for the FOMC minutes, and then when there were not any surprises they drifted higher. Not surprisingly, the QQQ with the strongest market phase had a stronger ‘drift up’ than the weaker IWM.
Obviously markets can’t go in the same direction forever, but as we head into the 3 day weekend it’s hard to expect anything different than what we’ve seen so far this week – quiet trends and consolidations.
S&P 500 (SPY) Fifth up day in a row and a quiet new all-time high. First support is now 240 then around 237.70, and 236.50 before you get to the weekly low of 235.40 If that breaks watch out below with support at 233.50 and then 225.
Russell 2000 (IWM) Consolidation day with a high at big resistance level of 138. Look for support about 136.80-137, but if it breaks below 136.35 it may be headed back down. A close above 138 would put things in a positive perspective
Dow (DIA) Marginally higher and stopped at 210 which is a big resistance level. 206.50 may offer support. 205.85 is the weekly low and if that breaks then it should find support around 204. If it breaks 204 the next support level is 194 on monthly charts
Nasdaq (QQQ) New highs.. Important support at 135.80 and if broken look for next support at 133.70
KRE (Regional Banks) Inside day, consolidation. There’s a lot of resistance at 54-55. The big support to hold is 51.50. Big support at 46.50.
SMH (Semiconductors) A quiet new high. May find support at 84, but needs to hold 81.44. If it can’t, next support at 79.60.
IYT (Transportation) Marginally higher. Today’s high is on the 50 DMA, and there’s a lot of resistance from 163-164.The 200 DMA is just below this week’s low at 157.40. This area needs to hold or it will look like this key sector is ready to lead the market lower.
IBB (Biotechnology) Another consolidation day. Stuck in a range of 295-288. Big support and 200 DMA at 285-284.
XRT (Retail) Lower again. It needs a flush and reversal pattern to think about any serious long play. Or a move above 43. Long-term pattern on weekly pattern looks heavy with support at 38 at 80 month moving average.
IYR (Real Estate) Nice trend up day. No longer stuck between 77 and 79. Look for resistance at 79.70 then 870.20-80.40. Should find support around 79.
XLU: Nice up day, but couldn’t close over 53. 52 should be support. Looks setup to run higher.
GLD (Gold Trust) Needs to get over 120 to look good and confirm phase change. Breakdown under low at 118.50 could mean a lot more pressure to downside to follow.
SLV (Silver) Weak day but it held 16 which is a key level to hold now.
GDX (Gold Miners) Wait for a break over the 200 DMA and 6-month calendar range of 23.90 to get long.
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