Mish's Market Minute

Is The Stock Market Looking to Consolidate Near Highs?

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Inflation pressures take the media's focus this week. Nevertheless, we must remember the news does not always align with market price.

With that said, prices are holding near highs in the major indices. This is a positive sign as investors are looking for a continuation in trend or consolidation. However, lower amounts of volume paired with smaller daily ranges in the above chart's point to more consolidation.

Looking at the S&P 500 (SPY), Nasdaq 100 (QQQ), Dow Jones (DIA) and the Russell 2000 (IWM), each sits within its prior days' range. If the market makes a small break from the highs, we can look at the last couple of days' lows as minor support levels to bounce from. These support levels are also shown as black lines on the above charts. Using these lows as reference areas, we can watch them as potential buy entries if the market begins to bounce.

Additionally, using bonds as a risk on or off indicator — High-Yield Corporate Bonds ETF (JNK) has pulled back towards its 200-day moving average, while the 20+ Year Treasury bonds TLT is holding above recent price action and over its 50-DMA.

With long-term bonds showing strength and JNK pulling back towards support, this further points to market hesitancy. Nonetheless, if a small pullback forms, the media will likely point towards inflation as a key pressure; however, we will be one step ahead, knowing that the technical analysis has already given us a partial warning.


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On the latest edition of StockCharts TV's Mish's Market Minute, Mish shows you the potential signs that the market might crack! She covers key intermarket relationships and does a deep dive into the market.


ETF Summary

  • S&P 500 (SPY): 466.92 minor support.
  • Russell 2000 (IWM): 237-240 support area.
  • Dow (DIA): 359.87-361.89 support area.
  • Nasdaq (QQQ): 393.92 minor support.
  • KRE (Regional Banks): 72.90 support area.
  • SMH (Semiconductors): 294 minor support.
  • IYT (Transportation): 273.76 support the 10-DMA.
  • IBB (Biotechnology): Inside day.
  • XRT (Retail): 100 minor support.


Forrest Crist-Ruiz

MarketGauge.com

Assistant Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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