Will Decaying Market Bears Reignite?


Smokey the Bear originated in New Mexico in 1950.

A major wildfire in the Capitan Mountains brought firefighters to the scene.

As the crew battled to contain the blaze, they received a report of a lone bear cub seen wandering near the fire line.

A forest ranger found the poor little dude in a tree, charred and burned.

He drove the cub to Santa Fe, where he was treated for massive burns. After he healed, he was sent to a zoo, where he lived until his death in 1976.

Hence, the popular anthem Smokey the Bear was born.

What does this have to do with the photo and the market?

The beak represents the decay of the bears these last few months.

As far as the market, with all indices closing red on Friday, will the decaying bears reignite?

The overall picture of the 6 members of the Modern Family does not look bad. In fact, one could say that the red close Friday in all 6 members is nothing more than a healthy correction.

So with that in mind, starting with the top left, Semiconductors SMH, after a doji week last week, this week we have a bearish engulfing pattern.

In English, that means that after squeaking out a new all-time high, SMH closed in the lower end of the trading range for the week. A move under 139.77-this week’s low-should be duly noted as possible exhaustion.

Top middle is Transportation IYT. Another weekly bearish candlestick, the 200 level continues to elude our very important sector. However, IYT made up some necessary ground this week. Now, it should hold 195 or we will be back looking at 190.

Far right top row is the Russell 2000 IWM. Looking more like a gentle correction than a top, need I remind you that it continues to lag way behind the S&P 500.

Bottom left is Retail XRT. News of Macy’s (M), Pier One (PIR) closing stores along with Bed Bath and Beyond’s (BBBY) earnings woes, brick and mortar is our weakest link. Until XRT can make a stand over 46.00, we look at this as the slowing economy broadcast.

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