One of the best ways to get a quick snapshot of the market is by using Mish’s Economic Modern Family. These 5 sectors and 1 index can help guide us through the general market, as well as reveal potential weak areas for which we need to be cautious.
On Tuesday, members of the modern family have reached key price levels. That said, let’s see what key points we are looking at and how this may affect the next trading week from a technical standpoint.
Starting with the Russell 2000 small capitalization index (IWM), one thing is very clear; the 50-day moving average at $ 224.86 -225 is an important resistance level that needs to be cleaned up and kept on top. Over the past two weeks, IWM has failed in 4 separate attempts to eliminate resistance at $ 225.
Next is the transport sector (IYT). Stuck within a downward trend, it could try to clear last week’s consolidation area at $ 253.57. If you can eliminate resistance, you will need to show that you can keep up with several closures in this price area to show that the downward trend is down.
Going forward, the commercial space (XRT) was again surprised by last week’s breakout and is once again testing resistance at $ 97. Like IYT, you will need several closures daily during this level to demonstrate that you can clean the resistance and maintain it.
Meanwhile, the regional banking sector (KRE) will have to confirm a bullish phase change with a second close above its 50-DMA at $ 65.25.
On the other hand, both the biotechnology (IBB) and semiconductor (SMH) sectors are taking a breather from their recent higher movements. Specifically, SMH wants to test its recent support area from highs from June to July.
In general, the market is in a very fundamental price area, with the potential to increase sales growth if you can eliminate these major price levels and maintain recent support. This is especially true if IWM cleans $ 225 and IYT can clean and retain more than $ 253.57.
Follow Mish on Twitter @marketminute for stock selections and more. Follow Mish on Instagram (mishschneider) to watch daily videos in the morning. To see the updated media clips, click here.
- S&P 500 (SPY): Holding highs with support 436.
- Russell 2000 (IWM): 225 resistors still need to be removed.
- Dow (DIA): New highs.
- Nasdaq (QQQ): Flirting with the 10-DMA 366.89.
- KRE (regional banks): Looking at the second close of the 50-DMA at 65.35.
- SMH (semiconductors): 263.86 support area.
- IYT (transport): Look for another close in the 253.57 area.
- IBB (Biotechnology): 174 possible weekly chart resistance area.
- XRT (retail): Sitting on the resistance since 97.
Deputy Director of Research and Education in Trading