Is the Correction in the Market Over?

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For those of you who do not know much about me, I wrote a book called Plant Your Money Tree: A Guide to Growing Your Wealth.

The main thrust of the book was about market phases, of which we use 6.

In the book, I use weekly charts assuming that a longer timeframe rather than a Daily one to measure the market’s next moves and the macro, is better.

I also introduce the Economic Modern Family in the book.

Weekly phases combined with the incredibly accurate Family index and sectors, are super useful right now.

Coming into Monday, the initial sell off was significant.

However, the indices and a lot of sectors popped off those lows.

What now?

On the weekly chart, the Russell 2000 IWM held the 200 and 50-week moving averages.

Granny Retail held the 50-WMA but is underperforming SPY and breaking the 50-WMA on momentum.

Sister Semiconductors fell to the 50-WMA precisely! However, SMH has hurdles with the momentum declining and the performance underwhelming compared to the benchmark.

Long Bonds TLT have run up but into the resistance levels of last October. Interestingly, the last time everyone called on the Fed to lower rates and were convinced recession was coming.

The Transports flashed warning ever since March when IYT underperformed the SPY and Real Motion indicated a bearish divergence.

As this week continues, it will be up to 1 of 3 scenarios to help us decide what is next:

1. Bonds break out more (over October highs) and continue higher in a flight to safety, not good
2. Semis hold here and resume rally, which in turn spurs on Gramps and Granny to hold and run and the bonds sell off.
3. Transportation does not hold Monday’s lows and sells off further-this is the surest sign on whether we see recession coming.

 

Educational purposes only, not official trading advice.

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
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Mish in the Media-Want to see more? All clips here

Yahoo Finance Mish talks about the obvious cracks that led to this sell off and what might be next 08-02-23

CNBC Asia Fast Money Post Fed and why recession may be on the table 08-01-24

Business First AM Why Saleforce.com is compelling to be on your radar 07-31-24

F.A.C.E Mish discusses gold, silver, dollar, oil, bonds the economic modern family and more 07-31-24

 

Coming Up:

August 5 Breakfast Bytes Singapore radio

August 6 Fox Business Charles Payne

August 7 Better Trader Systems Podcast

August 7 IBD podcast

August 8 Wealthwise with Jordan Kimmel

Weekly: Business First AM, stockpick.app

 

ETF Summary

S&P 500 (SPY) 540 resistance with 505 next support

Russell 2000 (IWM) Sitting on key weekly support

Dow (DIA) 380 support

Nasdaq (QQQ) 430 pivotal 420 support

Regional banks (KRE) 50-52 support

Semiconductors (SMH) 207 is the 200-DMA support 200 the weekly support

Transportation (IYT) 61 next support on weekly charts

Biotechnology (IBB) 140 support

Retail (XRT) 70 key support

iShares iBoxx Hi Yd Cor Bond ETF (HYG) 76.50 is the support we watched starting in May-now back