The Weaker Market Sectors Rally To Resistance

May 4, 2019

Mish's Daily

By Mish Schneider


A while back I stated that by the time Regional Banks KRE, Retail XRT and the Russell 2000 IWM, reach their 50-week moving averages (blue) the top is near.

As of Friday’s close, KRE came within spitting distance of its 50-WMA.

XRT has another dollar to run til it gets there (if it gets there).

And Granddad, for the 7th time, pierced and closed above its 50-WMA.

Are we near the top?

Before I took a break, we were looking for unity in the Family.

With Semiconductors flying and Transportation trying, we needed to see the others play catch up.

Interestingly, SMH had an inside week. No new highs there.

IYT boucned from a retest of its 50-WMA, but also did not get close to the week before’s highs.

That means that the run in IWM is impressive.

Yet not enough at this point, to spur XRT and Biotechnology IBB, our weakest link into weekly bullish phases.

This week watch for IWM to continue to lead. We need to see KRE hold its gains and clear the 50-WMA.

IBB must continue its journey north. And XRT, must also head closer to the 50-WMA.

Thagt’a slot of froth the market needs in order to keep the bulls sustained.

Othewise, my prediction that once KRE and XRT reach their 50-WMAs, the top could be in, well, keep that in mind before you continue to buy high.

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S&P 500 (SPY) All-time high 294.95. Has to clear or could see another test of 290

Russell 2000 (IWM) New swing high made at 160.64. 157.15 support that must hold and 162.74 the October high next resistance.

Dow (DIA) 269.28 all-time high. Must clear Friday’s high at least 265.25 and hold 261.

Nasdaq (QQQ) New all-time high at 191.32. 189.80 big support for this to hold

KRE (Regional Banks) 55.90 the 200 DMA as support with 57 significant resistance

SMH (Semiconductors) All-time high at 120.71. With an inside week, must hold 113.49

IYT (Transportation) 198.50 resistance from the day it broke hard and has to clear that plus held around 195.

IBB (Biotechnology) Has resistance at 108 109, 11. So we need to see a lot of refresh buying. Critical support at 106.50

XRT (Retail) 45.15 the closest pivotal support area with a way to go to the 50-WMA at 46.90.

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