October 30, 2018
By Mish Schneider
Yet another day where all four indices had inside days (when the trading range is within the trading range of the day before).
This feels a bit like deja vu all over again.
On October 25th, after reporting the same technical setup as today’s I wrote, “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.”
We all know how the last inside day reconciled.
Question is, how will this inside day reconcile?
The inside day setup is always most interesting after the instrument makes new lows.
Such is the case for the S&P 500, Dow and NASDAQ 100.
The Russell 2000, on the other hand, did not make a new low yesterday. Rather, IWM’s new low came Friday.
The most fascinating instrument though, and member of the Modern Family is Transportation, IYT.
IYT closed over yesterday’s high, hence putting in a potential bottoming reversal pattern.
One caveat however, is it did so on lighter than average daily volume.
Nevertheless, between the inside days in the indices and Transportation’s impressive run-IYT could be right and today’s action will look like a soft landing on hay for the bulls…
Or, IYT could have run ahead of itself and the indices will reconcile to the downside.
If thus, the bulls will have managed to land on that one needle in the haystack.
S&P 500 (SPY) 270.25-259.85 is the range to break one way or another
Russell 2000 (IWM) 144.70-150.63 range to break one way or another
Dow (DIA) 241.05-250.24 range to break one way or another
Nasdaq (QQQ) 160.09-169.86 range to break one way or another
KRE (Regional Banks) If this gaps over 53.69, then could be a good buy opportunity against recent lows
SMH (Semiconductors) Like IYT, cleared the high from yesterday when it made a new low. Reversal pattern on better than average volume
IYT (Transportation) Let’s see if this holds 182.67. And still has work to do-like close the day above there which will show it’s holding the monthly MA plus, get through 185, the 10 DMA
IBB (Biotechnology) Inside day here-100.66-105.80 the range to break
XRT (Retail) As we suspected, XRT did the best since it never broke the monthly MA. Now, if this is a V-bottom, then must hang onto 47.25
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