The transportation sector (IYT) bounced off $268, closing +.32% on the day. This was a pivotal level to hold and becomes more important when compared to the rest of Mish's Economic Modern Family. Besides IYT, the Family consists of Retail (XRT) Regional Banking (KRE), Biotech (IBB), Semiconductors (SMH), and the small-cap index Russell 2000 (IWM). The Family provides an easy way to grasp a quick picture of the overall market direction.
As seen in the charts above, IYT was the only member to test its 50-Day moving average. Moreover, while other members are not far from their 50-DMA, we have paid special attention to the Transportation sector, as it shows investors sentiment towards the movement of goods. The general idea is that, if the movement of goods begins to slow, it could be a warning signal for the rest of the market, which relies upon its long-term strength to push to new highs.
While IYT held this specific price level, IWM and XRT cleared their important levels. IWM was able to clear resistance from its previous high on 4/29 at $230.95, while Retail XRT broke its high from 3/10 at $96.27.
With that said, the market has not been easy to trade, and while IYT was able to hold over $268 on Tuesday, the volatility near these pivotal price areas has increased. Therefore, we can continue to watch for these breakout and support prices to hold going through the week.
It should also be noted that, on Thursday, the CPI (Consumer Price Index) report is released, which is a way for the Fed to gauge the rate of inflation and progress of the economy. While the Fed has kept a firm stance that it does not want to make any changes until it has seen a larger economic recovery, the report still can hint towards policy adjustments later down the road.
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- S&P 500 (SPY): 422.82 needs to clear and hold. Bounced off the 10-DMA 4.20.26
- Russell 2000 (IWM): 234.53 high to clear.
- Dow (DIA): 351 resistance. 342.43 support.
- Nasdaq (QQQ): 338.19 resistance area.
- KRE (Regional Banks): Holding 70.00 with 71.82 resistance.
- SMH (Semiconductors): 244.61 support. 258.59 resistance.
- IYT (Transportation): 268.30 the 50-DMA.
- IBB (Biotechnology): 159.30 resistance area.
- XRT (Retail): Cleared 96.27 resistance.
Assistant Director of Trading Research and Education