October 8, 2018
By Mish Schneider
Last week, the Semiconductors ETF closed under the 50-week moving average for the first time since November 2016.
Three weeks before, the Regional Banks ETF (KRE) broke its 50-week moving average.
However, KRE does not have the same record as SMH.
Whereas SMH broke a nearly 2-year trend, KRE waffled up and down the 50 WMA in 2017.
Not insignificant though, in that KRE held the 50-WMA for a year.
Bigger point is that we now have 2 important sectors in the Family below a key moving average.
That makes the action in the other four a lot more critical to the next big move.
With KRE and SMH down, who is the alpha member of the Family to watch?
If you guessed the Russell 2000 IWM, bravo!
159.43 is the current level of its 50-WMA.
Today’s low was 160.55.
Although IWM briefly traded below its 200-day moving average, like SMH, we cannot call a solid top in the market until the price breaks under the 50-WMA.
Like SMH, IWM has not traded below the 50-WMA since November 2016.
That means, the market will most likely follow IWM’s lead.
A hold of the 50-WMA and a return over 164.07 should allow SMH to try her hand at 104.40-the 50 WMA.
If IWM cannot make it through that level and SMH does not clear 104.40, you got yourself a rally to sell.
Naturally, we are also watching Transportation IYT.
Far from its 50-WMA, it nonetheless went into a warning phase.
Furthermore, the 200 level is a good line in the sand to watch for a hold or failure.
So, as we continue into the week, I still want you to keep eyes on the rates, US dollar and commodities.
Yet, you now also have a Family.
And you know how that goes-a Family that stays together pays off!
S&P 500 (SPY) 287.70 the very pivotal 50 DMA
Russell 2000 (IWM) This popped from the 200. But, unless it can clear back over 164.07 on a closing basis, it will be a temporary hold
Dow (DIA) 259.50 is the underlying 50-DMA support. Best I can say right now
Nasdaq (QQQ) confirmed warning phase. Looking more like a double top unless it can clear and close over the 50 DMA or around 182.30
KRE (Regional Banks) Lots of bank earnings this week-watch 61 for resistance
SMH (Semiconductors) Closed below the 50 WMA-now if it cannot get back over 104.40-look at SOXS
IYT (Transportation) 202 first line to clear if this is to recover. 200 is the place it must hold
IBB (Biotechnology) 115 pivotal support, then 112. 118 now resistance
XRT (Retail) 47.70 the 200 DMA which it too popped up from