July 10, 2017
By Mish Schneider
No doubt, elements of the current market condition can make one uneasy.
Like driving a hotrod going 100 mph without a seatbelt on, getting long up at these levels can feel death defying.
Just look at the brick and mortar retail sector (XRT). For us, the idea of mall shopping died when we moved from New York to New Mexico. (Sorry New Mexico).
The malls here have more geriartic mall lappers than shoppers.
Yet, I thought our state the exception not the rule.
Nevertheless, massive chain store closings have dominated the retail news. Amazon and online shopping dominate.
Where have all those laid off gone for work? Clearly not reflected in last Friday’s strong jobs number.
Today, XRT fell over 2% and sits close to to the 2017 low 38.65. A five-year bull-trend could reverse should XRT close out the month beneath 38.30.
In contrast, last week money rotated out of Tech into Transportation. Excelllent sign for at least the perception of the U.S. economy in spite of retail.
So, what us worry?
NASDAQ stocks grabbed the bulk of the action. Semiconductors, after making a 10% correction from the all-time highs, rallied enough to put SMH back into an unconfirmed bullish phase.
For promise of a stronger U.S. economy, I prefer to see the buying in the other Modern Family sectors.
Indeed, IYT holds above the monthly channel resistance line. And, last Monday’s low price 172.85 is important, especially on a closing basis for the week.
But IYT closed red. And it must hold and lead to keep the hotrod from running out of fuel.
The Russell 2000 (IWM) struggled at the pivotal 140 level.
Regional Banks (KRE) closed red.
Biotechnology (IBB) closed red and struggles to hold the pivotal 310 level.
Retail (XRT) got crushed.
Can Technology and FANG stocks carry the market?
Perhaps enough for that dramatic blow off rally to occur. But not enough to percolate the US economy.
In order for the American hotrod to purr, we need to see investor faith in the salient sectors of the economy.
S&P 500 (SPY) 244-245 resistance to clear. 242 pivotal Under 240 not so good
Russell 2000 (IWM) I’d still consider the channel resistance at 142.90 as the number to watch. 140 pivotal. 137.50 support
Dow (DIA) 214.35 pivotal. 212 support.
Nasdaq (QQQ) 140 resistance. 137 pivotal and 135 support
KRE (Regional Banks) Must hold 54.75 clear 56.00 once and for all
SMH (Semiconductors) Unconfirmed bullish phase. 83.50 pivotal.
IYT (Transportation) Unless it has a vicious fall below 172.50, patience prevails
IBB (Biotechnology) Trying so hard to hold 310 area
GLD (Gold Trust) Inside day. Should this clear 115.80 with volume could be a reversal pattern in the works.
SLV (Silver) Double the average daily volume and possible reversal pattern if confirms
GDX (Gold Miners) Held 21.00. Possible reversal pattern
XME (S&P Metals and Mining) Unconfirmed accumulation phase
URA (Uranium) Subscribers: Basing
USO (US Oil Fund) 9.00 the ultimate support held but not until this clears 9.50 is it exciting
TAN (Solar Energy) Must close above 20.00 to keep going.
TLT (iShares 20+ Year Treasuries) 124-125 resistance. 122.25 support
VXX (Volatility Index) No drama no fear
UUP (Dollar Bull) 24.95 pivotal resistance
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