July 6-Month Calendar Range: Small Caps V. Chips

By Mish Schneider of MarketGauge

Wednesday, July 24, 2024 5:26 PM EDT

To repeat on the importance of the July (and January 6-month calendar ranges)

The Six-Month Calendar Ranges

Overall, we look at 2 simple things.

If an instrument breaks out of the range or breaks below with momentum and price and then has follow-through.
If an instrument breaks out or down and then reverses back into the calendar range high and low.

Looking at IWM or the small caps, any question on whether this is the new kid (in our case new Granddad) in town, is answered.

Holding above the July range (green horizontal line) is a positive.

Of course, should the market fall further that could change.

Nonetheless, if the market firms from here, IWM is a good place to go for more upside.

On the flip side, and completely different from what we have seen for the last 2 years, our Sister Semiconductors SMH is having a hard time.

SMH not only failed to clear the July range high, but it also broke the low last week.

Now, SMH is in an unconfirmed warning phase, trading under the 50-day moving average.

The momentum or Real Motion indicator is pointing to oversold.

Hence, we could see a bounce tomorrow perhaps back up towards the 50-DMA.

But unless we see a real reversal with price back through the calendar range lows, we can assume that the trend is real.

Money continues to rotate into small caps and out of Mega caps.

ETF Summary

S&P 500 (SPY) 540 support

Russell 2000 (IWM) 217 support 227 resistance

Dow (DIA) 400 pivotal

Nasdaq (QQQ) Broke under the 50-DMA but some weekly support 463

Regional banks (KRE) 54 now support with 60 next level to watch

Semiconductors (SMH) Failed the 50-DMA

Transportation (IYT) 64.10 support

Biotechnology (IBB) 146 now pivotal

Retail (XRT) 75 pivotal

iShares iBoxx Hi Yd Cor Bond ETF (HYG) 78.00 support

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