The Year Of The Pig Sidles Up To The Market Bears

Piglet sidled up to Pooh from behind.
Pooh, he whispered, ”Yes, Piglet?”
“Nothing,” said Piglet, taking Pooh’s paw.
“I just wanted to be sure of you.”

When a pig, in the Year of the Pig, sidles up to a bear (Pooh), you can expect action like we saw in the market today.

When a pig just wants to be sure of the bear, you get a downturn as the bears come out of the woodwork.

However, since I am not really sure what the rest of Mr. Fuqua’s sculpture represents, so too, am I not sure if our market pig should be so very sure of his Pooh bear.

So many conflicting signals flying around, for instance,

Lower interest rates, a stronger dollar, the border wall and the government potentially shutting down, postponed talks with China on the tariffs and an economic slowdown in the global economy.

Yet, technically, the bears did not really do much damage.

As we are influenced by the fundamentals, but act on the technicals, what would make Pooh braver and larger?

Coming into today, we noted that the rally off the December lows was either a monster dead-cat bounce or the start of a foundation to melt-up from.

We also noted that as of yesterday, only Biotechnology (IBB) and Semiconductors (SMH) had entered a weekly bullish phase.

And that both needed to close above their weekly 50-WMAs again this week to confirm. With SMH well below 101.06 and IBB well below 109.90, that now seems less likely.

In contrast, the Russell 2000 (IWM), Transportation IYT, and Regional Banks (KRE) are all in Caution phases on the weekly charts, while Retail XRT, is in a Distribution phase.

With that said, the four indices corrected into support on the Daily chart. The Dow, in particular, is above its 200-DMA. The rest, including IWM, are in Recuperation phases.

All held their fast or 10-day moving averages.

For Friday, we will be watching for today’s lows in the indices to hold.

We will also be watching for the economic Modern Family, especially Semiconductors as the recent leader, to hold this week’s lows. In SMH that level is 96.99.

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