March 20, 2019
By Mish Schneider
Coming in to today, we had eyes on Semiconductors SMH.
The reason is that our sister of the economic Modern Family has led the recent rally.
With the Russell 2000 IWM and Transportation IYT relatively weak, SMH had to hold up in order to keep her siblings together.
Before the dovish FOMC announcement, it looked like SMH was destined to join her Granddad and Brother in the rubble.
However, right on cue, Jerome Powell and the gang came out with the statement that they will keep rates the same and not raise them until 2020.
So maybe the real moody little sister is Powell.
Regardless, those words temporarily boosted SMH from a potential nasty topping reversal signal.
Until late in the day.
Not everybody in the Family bounced as happily though.
Regional Banks KRE and Granny Retail XRT, are now in bearish phases on the Daily chart.
Transportation IYT, ended the day in an unconfirmed bearish phase (needs another close under the 50-DMA to confirm.)
With so much disparity, who is the moodiest one of all?
The chart is a weekly one with the blue line the 50-WMA and the green line the 200-WMA.
Besides Biotechnology, SMH is the only other Family member in a weekly bullish phase.
IBB and SMH are the two most highly speculated members of the Modern Family. Hence, no surprise that the public interpretation is that the Fed can keep the money pumping indefinitely, which will in turn keep the economy and market in good shape.
I’m not so convinced.
In fact, I’ve made no secret that I believe this trail to lower rates and a lower dollar will lead to a stagflation environment.
Just look at gold. That had a way better rally than the indices and held that rally into the end of the day.
IYT, IWM and SMH did not.
Who is the moodiest one of all?
Besides the Fed?
I’d say the bulls in the Family.
Or at least they will be when they realize that monetary policy is out of control.
S&P 500 (SPY) 281.41 held on a closing basis. That means we did not have a reversal topping pattern. However, under 279.80 I’d get cautious. Plus, I would not be surprised to see an inside day Thursday.
Russell 2000 (IWM) 1151.20 is the 50-DMA. 154 pivotal and over 157.20 a miracle.
Dow (DIA) 257 is pivotal for Thursday
Nasdaq (QQQ) New swing high today at 180.86 Has to hold/close over 178.24
KRE (Regional Banks) In an Unconfirmed Bearish Phase-back in October, this one crashed first. Now, a move under 51 not a good sign
SMH (Semiconductors) Did have a potential topping pattern with the close under 106.42. However, another day to confirm that is best
IYT (Transportation) This failed 2 days ago, so no surprise it would continue that demise today. 183.15 now pivotal 50-DMA
IBB (Biotechnology) 115 resistance and 110.40 the best underlying support
XRT (Retail) Confirmed the bearish phase and under the 200-WMA which makes 44.55 pivotal