Market Cycles from the Cradle to the Coffin

March 25, 2018

Mish's Daily

By Mish Schneider

blankThe Modern Family was seen shopping last week.

No, not for new clothes, or fancy vacations. And not for a brand new car or bigger home.

Rather, Granddad Rusell 2000, Granny Brick and Mortar Retail, Transportation, Sister Semiconductors, Prodigal Son Regional Banks, and Big Brother Biotechnology, decided it was time to prepare for the worst.

With that, they discussed funeral budgets.

Too morbid?

Well, when you consider that NASDAQ 100 went from market leader to a nail in the market’s coffin, not really.

So, as the Modern Family’s executor, I’d like to review where each one is at, and what are the potential opportunities to look for going forward.

A couple of weeks ago, I, like many others, posed questions that we knew the answers to could yield last week’s carnage.

Questions like:

Will Trump’s meeting with Kim Jong Un go well? TBA

Will stagnant wages and increased debt by consumers impact the market? Granny Retail reflected the suffering brick and mortat sector.

Will rising rates and a falling dollar eventually engender inflation? Fed raised, dollar fell, right on cue.

Will Powell seize the moment to raise rates by more than .25% and create some panic? Affirmative.

So what now?

Interestingly, when those questions were posed, the NASDAQ 100 closed on new all-time highs.

Almost comical now, in a sardonic sort-a-way.

I did post some charts over the course of these two weeks. One that showed the Semiconductor’s (SMH) topping candle.

A chart of the Euro (FXE), with an emerging bull flag that signaled us to watch for a breakout.

The Commodities Index Fund ETF DBC, about ready (it did) to clear the 200 week moving average after years of being in a downtrend.

With the Dow at 2,350 and off a whopping 1250 points from the peak, the good news is, the weekly charts in the indices and most of the Modern Family, are intact in their uptrends.

IWM has major support at 146-the 50 week Moving Average, which is still sloping up. For IYT, that area is 177.50.

In SMH, the 50-WMA support comes in at 94.00. In KRE, that number is 56.75.

2 Modern Family Sectors that have been weak, became weaker.

Granny Retail, XRT, never in a weekly bullish phase, best it did was accumulation, went into a Distribution Phase.

Biotechnology (IBB) went into a Warning phase, closing the week at 105.29 and under the 50 WMA at 106.

XRT can still hold the 50 WMA at 42.43, while IBB has support at the 200 WMA or around 101.50. Furthermore, IBB can retake 106 for a big nevermind.

That means, watch for those 2 anemic sectors to find underlying support. And, definitely watch for the others, still in weekly bullish phases, to stay there.

If not, expect more carnage. And if you believe in an afterlife, expect a continuing resurrection of the metals and soft commodities, while interest rates steady and the dollar declines further.


S&P 500 (SPY) Landed right on the 200 DMA. Perhaps it will go lower, but I’ d watch for it to hold 258 and, unless the news gets worse, some digestion as it is oversold. Resistance at 265. PIVOTS NEGATIVE

Russell 2000 (IWM) For the befginning of last week, IWM looked like the hero. Alas, he went from hero to villain. The 200 DMA is at 147.68. Key to hold with 153 pivotal resistance

Dow (DIA) 233.50 is the 200 DMA

Nasdaq (QQQ) Back over 162.50 would be better. Otherwise, the 200 DMA is at 152.30

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