January 27, 2019
By Mish Schneider
Keeping with my recent tradition of an end-of-week look at the Economic Modern Family, we see clues.
The weekly charts are useful for stepping back to gain perspective.
The top row left to right shows:
The Russell 2000 IWM, Transportation IYT, and Retail XRT.
The bottom row left to right shows:
Biotechnology IBB, Regional Banks KRE, and Semiconductors SMH.
What seems like an endless rally for some of the instruments, is also more of a pause in some of the other instruments.
This pause (and in a couple of instances) inside week action, will prove extremely helpful for an action plan for the coming week.
Where do we go from here?
For the Russell 2000, we see the classic inside week. With all the hoopla, all IWM did was trade within the trading range of the week before.
Same is true with Transportation IYT, and Retail XRT.
I find that curious considering these are the top 3 headliners of the Economic Modern Family. They best represent the U.S. Economy given their measure of supply and demand, as well as consumer sentiment.
Biotechnology did not have an inside week. However, also significant is that it could not close above the 50-week moving average (blue line).
Regional Banks did not have an inside week either. With so much overhead resistance at around 55.00, we have to wonder what more will it take to push prices up further in this sector?
Perhaps the most compelling is the Semiconductor sector.
Nevertheless, that too has a way to go before it challenges its overhead 50-WMA resistance.
At this time, all of the Economic Modern Family are in Caution phases with the exception of Retail, which is still in a distribution phase (under the 200-WMA green line.)
With the inside weeks in IWM, IYT, and XRT, we have a guideline. The way the range breaks (up or down) should prove very useful for trading in the right direction.
Additionally, in IBB, KRE and SMH, should they continue to run to or fail to get to their overhead resistance, we will have another essential piece of the puzzle.
S&P 500 (SPY) Another inside week. If we use 265 as the immediate pivotal area, we will get some insight into which way the weekly range wants to break.
Russell 2000 (IWM) 147.54-147.92 is the range to clear. Otherwise, under 146, could see some selling coming in.
Dow (DIA) 249 is the 50-WMA here and resistance.
Nasdaq (QQQ) Another inside week. 164.50 is the pivotal number to watch. Must clear over 166.60
KRE (Regional Banks) 53.00 nearest support level to hold. 55 major resistance
SMH (Semiconductors) 97.20 big resistance. 93.50 the support to hold
IYT (Transportation) Inside week. 177 the immediate support to hold. 180 huge weekly resistance.
IBB (Biotechnology) 110 resistance with 106.40 support
XRT (Retail) 44.76 the weekly resistance. 43.70 support to hold
Every day you'll be prepared to trade with: