April 16, 2018
By Geoff Bysshe
Today’s analysis is by Geoff Bysshe. Mish will return Monday April 23rd.
We didn’t get a huge trend up day in stocks, but we did get the biggest down day in the VXX for the month thus far.
The VXX has now declined over 12% in the last 3 days, which is the biggest 3-day decline of “fear” the market has seen since the VXX bottomed out around 38 in the beginning of March.
In March, the decline in fear translated into new highs in the IWM and QQQ, but this time around traders seem to be a lot less willing to bid up equity prices.
Only 3 of the 14 sectors we track on our Sector Summary table are positive year to date.
And only 1 sector is over its 50-DMA!
Should we see this as ominous or an opportunity?
Today’s best performing sector was Transportation (IYT), which prior to today, was one of the market’s weaker sectors.
Now IYT is the only one of the 14 sectors that is substantially over its 50-DMA.
XLK edged into a bullish phase today, but it’s too close to call ‘significant’.
The IYT is closely watched by market technicians, so if it can continue higher and break through the 195 level, it’s likely that the market’s decline in fear will translate into more confidence to buy.
In the meantime, keep an eye on the Sector Summary table for sectors that change their phase.
S&P 500 (SPY) Today’s high is the 50-DMA. Expect resistance at 270. Key support at 264.
Russell 2000 (IWM) Continues to grind higher. 156 is big resistance. Look for support at Friday low and 152.
Dow (DIA) Levels to focus on today’s high, Friday’s low, and then support at 241.40 and235
Nasdaq (QQQ) Couldn’t break Friday’s high. The 50-DMA is 163.87. Initial support at 161 then 160 and 159.25. Then 153 is the big low level.
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