Markets Following The Lines

February 12, 2020

Mish's Daily

By Geoff Bysshe


Yesterday I described picking top days vs. ranges, and today the markets followed the lines that were highlighted.

The DIA had been confined by a 5-day range until today. Its range didn’t turn out to be a top, but it did provide the trading guidelines we expect from compression patterns.

As soon as it found new-high ground, it never looked back.

IWM, on the other hand, wasn’t able to escape the gravity of its 5-day range, and faded.

Now the SPY, QQQ, and DIA all seem to be comfortable floating at new heights.

The QQQ even encouraged the notable laggard, AAPL, to close at a new all-time high creating what looks like a breakout of a roughly 10-day range.

VXX also broke below its multi-day range, further supporting the idea that the markets are content to drift higher.

I’ll repeat my closing remarks from Monday, don’t let any upside surprise you.

However…

The markets often follow a 3-day rhythm.

We’ve had 3 days of the market’s pushing higher, and our short-term Real Motion indicators on SPY and QQQ suggest that an O.R. breakdown tomorrow could lead to a trend down day.

I’m certainly not calling a top, but if the markets trade below their 30-minute O.R. tomorrow they may be looking to check back with the top of their prior ranges.

Let the bull trend run, but don’t get complacent.


Today's commentary was written by Geoff Bysshe

S&P 500 (SPY) Closed at new all-time highs. Support area is 334.20 to 333.

Russell 2000 (IWM) Range to watch the 50-DMA at 164.68 to 168.

Dow (DIA) Broke out of its range. Look for confirmation with a continuation day.  Support area is 294.25 to 293. Then 290 is the major support to watch.

Nasdaq (QQQ) Another move to new high. Support range is 230.30 to 228.40. Must hold 228.

KRE (Regional Banks) Range to watch is 10-DMA, 55.36 to 57.36.

SMH (Semiconductors) New highs. Support area is 148.50 to 147.

IYT (Transportation) Tried to break out of the 193.48-197.30 range. Needs to close well above 197.50 to break free.

IBB (Biotechnology) Consolidation right under new high range. Range to watch is 123.60 to 121. One of the better-looking sectors right now.

XRT (Retail) Close over 50 DMA and swing high. Watch for a confirmation move over 45.25. Support at 43.75, and then 42.90.



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