Caution All Around with Transportation Market’s Last Hope

May 12, 2021

Mish's Daily

By Mish Schneider


Written by Forrest Crist-Ruiz

Wednesday, the market continued the prior days' sell-off.

This has placed the overall market trend in a pivotal area as more sectors begin to look weak.

This can be seen in Mish’s Economic Modern Family which consists of one index and 5 important sectors.

Currently, the Russell 2000 (IWM), Retail (XRT), Semiconductors (SMH), and Regional Banking (KRE) are in cautionary phases, with the Biotech space (IBB) sitting in a distribution phase.

A cautionary phase is when the price is under the 50-Day moving average but over the 200-DMA.

This phase normally follows a bullish phase, where the price is still over the 50-DMA as seen in the transportation sector (IYT)

Additionally, because the transportation sector is over its 50-DMA, it is the last sector in a bullish phase within the Family.

This does not look great for the overall market picture and could be showing more chop and a bigger pullback is in form.

With that said, a cautionary phase does not mean we are taking a bearish stance.

Many times, a symbol can trade back and forth between phases before continuing higher or breaking down.

A good example is how IWM has consistently traded between a bullish and cautionary phase for the past 2+ months.

Moreover, we can watch how each Family member performs and if the ones that are still near their major moving averages can recoup back over the 50-DMA.

Recently the transportation sector has been the shining star of the bunch.

However, can it still hold up if most of the Family members are heading lower?


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ETF Summary

S&P 500 (SPY) 404 the 50-DMA.

Russell 2000 (IWM) Next main support 208.

Dow (DIA) 333.31 support area from the 50-DMA.

Nasdaq (QQQ) Confirmed a cautionary phase with second close under the 50-DMA at 352.88.

KRE (Regional Banks) Broke support at 67.87.

SMH (Semiconductors) 216.14 next support area.

IYT (Transportation) 260 support area.

IBB (Biotechnology) Second close under the 50-DMA at 146.94 will confirm a distribution phase.

XRT (Retail) Needs to get back over 88.47.

Volatility Index (VXX) 52.02 resistance from 17-Week exponential moving average.

Junk Bonds (JNK) 108.00 support.

XLU (Utilities) 64.29 the 50-DMA.

SLV (Silver) 24.74 support.

VBK (Small Cap Growth ETF) 259.62 support needs to hold or watch for the 200-DMA next.

UGA (US Gas Fund) Watching for follow-through from the breakout of 34.68.

TLT (iShares 20+ Year Treasuries) 135.00 support area. Then 133.19 next.

USD (Dollar) 90.78 the 10-DMA.

MJ (Alternative Harvest ETF) Broke 20.16 support.

LIT (Lithium) 57.90 next support.

XOP (Oil and Gas Exploration) support 82.38.

DBA (Agriculture) 18.74 support

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