Is The Correction In The Market Over?
For those of you who do not know much about me, I wrote a book called Plant Your Money Tree: A Guide to Growing Your Wealth.
The main thrust of the book was about market phases, of which we use 6.
In the book, I use weekly charts assuming that a longer timeframe rather than a Daily one to measure the market’s next moves and the macro, is better.
I also introduce the Economic Modern Family in the book.
Weekly phases combined with the incredibly accurate Family index and sectors, are super useful right now.
Coming into Monday, the initial sell off was significant.
However, the indices and a lot of sectors popped off those lows.
What now?
On the weekly chart, the Russell 2000 IWM held the 200 and 50-week moving averages.
Granny Retail held the 50-WMA but is underperforming SPY and breaking the 50-WMA on momentum.
Sister Semiconductors fell to the 50-WMA precisely! However, SMH has hurdles with the momentum declining and the performance underwhelming compared to the benchmark.
Long Bonds TLT have run up but into the resistance levels of last October. Interestingly, the last time everyone called on the Fed to lower rates and were convinced recession was coming.
The Transports flashed warning ever since March when IYT underperformed the SPY and Real Motion indicated a bearish divergence.
As this week continues, it will be up to 1 of 3 scenarios to help us decide what is next:
- Bonds break out more (over October highs) and continue higher in a flight to safety, not good
- Semis hold here and resume rally, which in turn spurs on Gramps and Granny to hold and run and the bonds sell off.
- Transportation does not hold Monday’s lows and sells off further-this is the surest sign on whether we see recession coming.
ETF Summary
S&P 500 (SPY) 540 resistance with 505 next support
Russell 2000 (IWM) Sitting on key weekly support
Dow (DIA) 380 support
Nasdaq (QQQ) 430 pivotal 420 support
Regional banks (KRE) 50-52 support
Semiconductors (SMH) 207 is the 200-DMA support 200 the weekly support
Transportation (IYT) 61 next support on weekly charts
Biotechnology (IBB) 140 support
Retail (XRT) 70 key support
iShares iBoxx Hi Yd Cor Bond ETF (HYG) 76.50 is the support we watched starting in May-now back
More By This Author:
Divided We Stood, United We Fall
How To Use Market Sentiment And Consumer Behavior To Value Stocks
Inflation, Recession, Or Soft Landing-Which?
GDP was only over because they are charging the sh*t out of us! Do you think this economy is rocking or are you some a boomer who has all of us strangled by policies?! Bearish.