June 1, 2017
By Geoff Bysshe
***Today’s commentary is by Geoff Bysshe, President of MarketGauge, and ETF Analysis by Mish.
Based on yesterday’s commentary, I got was I looking for today – a trend day. MMM Advantage members be sure to watch today’s video for a more detailed description of why anticipating a trend day was ‘easy’ as market predictions go.
Tomorrow is not as easy to predict.
Tomorrow is ‘jobs day’. The first Friday of the month the Labor Department releases a slew of data on the state of employment in the U.S.
In recent years, the employment data has been some of the most influential data in forming traders’ opinions on what the Fed will do next, and which way the market will go next.
And as we know, traders don’t always do what you’d expect them to do with new information!
So I prefer to avoid trying to figure it out which way the data will potentially move the market on the open, and instead have a basic game plan for what to do if the market gaps higher, and another plan for a gap lower.
A detailed plan is beyond the scope of the commentary, but a basic outline looks like this…
The trend up day today represented a healthy change in the bull market. The leading sector (SMH) took a break and the lagging sectors rode the bull.
This change is particularly important because several members of the Modern Family are now bouncing off big support levels and approaching big resistance levels.
If IBB, KRE, IYT, and XRT continue to move higher after the jobs data I’d expect more market new highs over the next week or longer even if SMH and QQQ take a break.
If the market moves lower on the news, it’s not a problem until today’s lows are taken out. Then it’s a big problem.
In short, as long as the SPY and IWM and the Modern family members that rallied nicely today don’t immediately reverse tomorrow because of the jobs data, I’m bullish.
In fact, as MMM Advantage members learned in today’s video, I think it’s time to consider buying the beaten down retail sector (XRT) if it survives ‘jobs day’.
S&P 500 (SPY) 240, which today now looks like that launch pad, is the best support level to watch hold. A target of 245-246.50 before Bollinger band resistance sets in is not out of the question.
Russell 2000 (IWM) May was not its best month. However, June starts with a bang. 140 resistance with a move to 142.00 level if that clears possible. However, should 137.50 break, weakness.
Dow (DIA) Closed on new all-time highs. 211 pivotal
Nasdaq (QQQ) 139.40 support underneath, as old Naddy closes once again on new all-time highs
KRE (Regional Banks) Held the 200 DMA well. Now, over today’s highs 52.77 there’s the 50-DMA 53.60 to tackle and clear
SMH (Semiconductors) Inside day after yesterday’s run to new highs.
IYT (Transportation) 164.50 is now support. 168 is culpable resistance
IBB (Biotechnology) Impressive hold of the 200 DMA. Couldn’t quite make it above the 50-DMA so tomorrows close should elucidate if this is a run to resistance or the start of something bigger.
XRT (Retail) Granny6 got juiced today. Still in a bearish phase but at least showed some market participation. The 50-DMA at 42.06 should be interesting.
IYR (Real Estate) Held all the moving averages but still in massive consolidation between 77 and 80.
XLU (Utilities) 52.00 rock bottom support. Closed on new 2017 highs and could see move up to 55-56.00
GLD (Gold Trust) Held up over 120 well despite the market strength. Through 121 could see 123. Under 118.60 trouble.
SLV (Silver) Breakout above 1 and 6-month calendar range highs barely holding A move above 16.55 should lead to a nice pop and clearing 16.75-80 would clear 200 DMA and bode well for further even bigger gains
GDX (Gold Miners) Quiet tight range and still waiting for a break over the 200 DMA and 6-month calendar range of 23.60 to get long. A break below 21 could get ugly to downside
XME (S&P Metals and Mining) If holds 28 and clears 30 could get interesting
USO (US Oil Fund) Looks heavy unless it clears and closes over 10.40
XLE (Sel Energy Spdr Fd) Possible reversal, but that has happened several times with no good follow through
TLT (iShares 20+ Year Treasuries) 123 is a good line in the sand to hold. Over 125.10 a phase change
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