The Stock Market Bears Unchained

May 7, 2019

Mish's Daily

By Mish Schneider

blankIn the art world of Santa Fe, NM, there exists a “caveat emptor.”

One example you see is in the photograph. Many art dealers sell sculptures priced as though they are original pieces made from bronze.

The reality is they are mass produced, most likely in China, and made with low-grade metals.

Similarly, the market gave the bulls “caveat emptor.”

After the Russell 2000 kicked bear’s butts yesterday, today it did what more discerning buyers thought it might do.

The two other featured economic modern Family members, Regional Banks KRE and Retail XRT were today’s big focus.

Yesterday, even with IWM’s impressive run in the face of additional tariffs on Chinese goods, XRT and KRE remained red.

Today, that diversion in the Modern Family forced the bears, chained up and on display, to break free.

But, is the bear a real bronze or a fake, mass-produced one?


Another concern we had coming into today was that Semiconductors SMH and Transportation IYT, last week’s stronger sectors, took hits yesterday, even if though they recovered from the lows of the day.

Looking at the weekly charts, SMH broke below last week’s inside week trading range. We see the 108 area as the next big support to hold.

IYT dropped right to the 50-WMA (blue line). That makes 190 super important support.

IWM, unsurprisingly, could not hold the market up, let alone itself. That too dropped to its 50-WMA. Holding at these levels is critical for the bulls.

The worst looking sector right now is Retail XRT, with Biotechnology, IBB a close runner up. The green lines (200-WMAs) are their major support areas. Should those levels break, I’d expect a lot more ugliness.

KRE (the one that reached its 50-WMA) retreated big time today, making the prediction that once this, XRT or IWM reached the resistance levels, the top of the market is in.

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S&P 500 (SPY) 290 quickly went from support to resistance. The 50-DMA is at 285.20

Russell 2000 (IWM) 157.15 the 50-WMA is the pivotal resistance. With 155.55 next level to hold

Dow (DIA) 260 is now the pivotal resistance as this broke the 50-DMA and is now in an unconfirmed caution phase

Nasdaq (QQQ) 186.43 now resistance. The 50-DMA support is at 182.00

KRE (Regional Banks) 55.90 the 200 DMA resistance now with 54.25 the next area of support

SMH (Semiconductors) 113.49 now pivotal number for tomorrow

IYT (Transportation) Held the support at 190-key for tomorrow

IBB (Biotechnology) 105.75 pivotal area with 103.50 support

XRT (Retail) Unconfirmed bearish phase

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