Slow Growth Speeds Up the Decline, but...

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It doesn’t matter how bad things are,
unless they’re getting worse!

Today's commentary was written by Geoff Bysshe, co-founder of MarketGauge.

There aren’t many analysts saying global growth is any better than ‘slow’. Likewise the market isn’t trading on the idea that global growth is good.

But the bounce from the February lows was sustainable due to a perception that “conditions were not getting worse”.

Today we saw a market start to believe that maybe our slow global growth world could be getting worse. This is the bull’s worst fear. And it’s been made harder to face with central banks becoming less dependable with more free money (i.e. BOJ last week).

Don’t worry we don’t need to be economists to figure out what comes next for the markets. We simply need to pay attention to where the money is flowing to see just how fearful and eager the bulls are to dump their stocks.

When the bulls are most fearful of slow growth stocks get sold AND interest rates go down. Lower rates means the etf, TLT, goes up.

Lucky for us the TLT, which until today looked like it was rolling over, gapped up into a big resistance area of 130-131. The gap up that held up is a sign of a market that is looking for safety and fears slower growth because rates go down when growth slows.

I say “lucky for us” because if TLT’s continue to move up despite this big resistance AND stocks continue to move down then the bulls are really on the run.

However, if TLT sell off and resume their rolling over pattern and stocks don’t go down, then this sell off may brush off today’s “slow growth” scare.

S&P 500 (SPY) There are 2 numbers to care about 207 to breakup and 205 to break down

Russell 2000 (IWM) This is the one we’re counting on to hold up, but today it broke last week’s low. Needs to get back over 111.75 first and then really over today’s high to be back on the upswing.

Dow (DIA) The big number to hold is 176. After than 175.50. Until it can break over today’s high (177.83) decisively, it’s under pressure like the rest.

Nasdaq (QQQ) The big number to hold is 104.88 (last week’s low), but until it gets back over the 200 DMA or goes much lower, this the most vulnerable.

XLF (Financials) Held 23 which demonstrates why whole numbers are so important to watch in the markets. It bounced to stay over the 200 DMA, which will make it interesting if interest rates resume their up trend (TLT’s move down) and XLF responds with a move up. Otherwise stay away.

KRE (Regional Banks) Bad breakdown today. Wait for 38.75 support or a move over 40.70.

SMH (Semiconductors) 54 pivotal. As is 52 as both the 100 and 200 DMA’s are there. 51.80 is its last hope before 50.25!

IYT (Transportation) Broke Friday’s low but recovered and now straddles the 50 and 200 DMA. Follow the direction of the break of today’s range, but resistance gets heavy starting at 142.40.

XRT (Retail) Sliding. Lots of resistance at 44.75. Support area is 43.50-43.00

IYR (Real Estate) Nice inside day pattern, but probably a function of TLT’s move higher (lower rates). Nonetheless, one to watch on the upside over 77.80.

GLD (Gold Trust) Consolidating. 121 is support and where it broke out of the channel from

SLV (Silver) May be a reversal. Like to see this hold 16.

GDX (Gold Miners) Continued to pull back from a dizzying run up. 23.75 is first support.

USO (US Oil Fund) First close under the 10 DAM in a month. Needs to clear 11 to be back on the up swing. 10 should be good support

XOP (Oil and Gas Exploration) Big break today, but into a support area. Wait for it to stop dropping.

TAN (Guggenheim Solar Energy) Like XOP, big break today into bearish phase, but into a support area. Wait for it to stop dropping. Sitting on a trend line from the Feb lows.

TLT (iShares 20+ Year Treasuries) A big reversal gap up right into the 50 DMA and big resistance area around 130. Watch the next move beyond this range carefully. If down it could be a good low risk short. However, Friday jobs report creates risk of a big gap.

UUP (Dollar Bull) Key reversal on good volume. Big resistance at 24.25 and no real support until 23.50 good support