October 25, 2018
By Mish Schneider
Last night, after reporting all the breakdowns I asked, “Is there good news?”
One answer I came up with is, “Perhaps if Biotechnology IBB recaptures 104.68 by the end of the week, that will be good news.”
Today’s closing price in IBB was 103.99.
Also, looking at NASDAQ 100 QQQ, I reported that it “Broke 169.41 its 50-week MA. If cannot get back above by the end of the week, will be first close under since July 2016. 153.56 the 23-month MA.”
Today’s closing price in QQQs was 170.75. And then, once Amazon and Google reported, QQQs went to around 168.35 in the aftermarket.
Therefore, if QQQs cannot hold above 169.41 by the close tomorrow, it will not be good news.
Since the real key to the economic picture is best seen by the Russell 2000, Granny Retail and Transportation, let’s revisit how they look after today and what they must do going forward.
Looking out further, we need the Russell 2000 IWM to close the month over 150 so it looks better longer-term.
Yet, not only is that another week away, IWM will still be trading under the 50-week moving average or 159.42.
That will be one heck of a rally if it can get up there.
Granny Retail XRT has a good shot since it never broke the 23-month MA at 44.50.
Plus XRT, sits just under the 50-week moving average at 47.20.
If XRT can pull itself to end the week above that level, that will be a relief-at least in that sector.
All the indices, QQQ, SPY, IWM, and DIA had inside days (traded within yesterday’s trading range.)
This is typical after a huge range and must show a reconciliation one way or another-a break above/below that range. This range break will be a big tell for the market.
Finally, Transportation IYT, has a couple of interesting technical setups. It did not have an inside day.
Rather, it made new lows for this correction and then rallied. Plus, it cleared back over the 23-month moving average. It does remain far from the 50-week MA (193) however.
If IYT clears today’s high, 182.33, then its ability to lead the charge, even without the indices reconciling their inside days, will be very helpful.
Can the market clear resistance?
Now we have some numbers that will replete or deplete the fuel in our hot-air balloon.
S&P 500 (SPY) If this closes the week under 274.46, it will be the first breach of the 50-week MA since March 2016. 257.83 the 23-month MA.
Russell 2000 (IWM) Only if this closes the month over 150 will it look better longer-term.
Dow (DIA) If this closes the week under 250.11, it will be the first breach of the 50-week MA since March 2016. 231.91 the 23-month MA.
Nasdaq (QQQ) Broke 169.41 its 50-week MA. If cannot get back above by the end of the week, will be first close under since July 2016. 153.56 the 23-month MA.
KRE (Regional Banks) Inside day. Through 53.09 better, under 50.69 not so much
SMH (Semiconductors) Inside day. Through 93.56 better, under 88.82 not so much.
IYT (Transportation) 182.83 clearance would be awesome if happens
IBB (Biotechnology) 105.32 clearance would be awesome if happens
XRT (Retail) Would like a lot better over 47.20 especially if closes above
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