With all but one member of the Economic Modern Family in a bullish phase, should we be worried? Or does Monday hold the next piece of pivotal price action?
Before we attempt to answer this question, we should first know where each member stands and if anyone sits in a risky place.
First up is Granddad Russell 2000 (IWM). Friday's low brought him close to major support from the 50-DMA at $210.95. This area coincides with consolidation from mid-to-late January. If the market takes a negative turn Monday, watching support hold in this index is key.
However, the Russell 2000, along with the rest of the Family, are not in alignment with the biotech sector (IBB). IBB has broken below its 50-day moving average for 2 consecutive days. This confirms IBB has entered a cautionary phase.
Recently, the Transportation sector (IYT) dipped below its 50-DMA into a cautionary phase, but was able to recover. At this point, watching for multiple Family members to break their 50-DMAs and confirm will show us if we need to decrease our risk exposure in the market. In the case of IYT, no other member broke their 50-DMA. IYT then went on to clear all-time highs and is now sitting above a support area of 230.
Currently, the closest member to break its 50-DMA is semiconductors (SMH). SMH hit a low of 234.91 on Friday, with the 50-DMA sitting right at 233.33. If SMH cannot hold, we should watch for other members to follow.
When it comes to the last two members, Granny Retail (XRT) and Regional Banks (KRE), both have a decent amount of room between price and their 50-DMAs. With that said, the current trend favors the Family holding over its major moving averages.
Monday's price action may be pivotal, but, with the Family's help, we know what to look for and what levels need to hold.
Is it time to buy these stocks? In this week's edition of StockCharts TV's Mish's Market Minute, Mish gives new actionable ideas based off stock earnings. Now that we are having a big correction, these are some names that reported and should be on your radar.
- S&P 500 (SPY): Needs to hold over the 50-DMA at 379.80
- Russell 2000 (IWM): Support 215 with more at 211, the 50-DMA
- Dow (DIA): 308.73 the 50-DMA
- Nasdaq (QQQ): Next support 311, the 17-week moving average
- KRE (Regional Banks): 64.07 the 10-DMA
- SMH (Semiconductors): 233.33 the 50-DMA needs to hold
- IYT (Transportation): Held over the 10-DMA at 234.11
- IBB (Biotechnology): Next support 155
- XRT (Retail): Support 75-73
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
