April 6, 2019
By Mish Schneider
One of the most memorable Robin Williams routines, was the one he did about Gaddafi.
“This a line of death. You cross it, you die.” Then he takes a step back and says, “OK, you cross this line, you die.” One more step and again, “OK you cross this line, you die.”
We all know it did not end well for Gaddafi.
Similarly for the market, lines keep getting pushed back.
The recent price action has been more about, “You cross this line, you live.”
These lines in the market, are based on technical parameters.
Yet, there is also a psychological component to theses lines or moving averages.
Hence, these lines offer the market life for now.
However, it is smart to be aware of where these lines are.
And how quickly they can cross to death.
To see where the lines are, we look at the weekly charts of the economic Modern Family.
Top left: Transportation IYT. Over the 50-week moving average (blue). 189.63 is the line between higher levels and a major retreat.
Middle is the Russell 2000 IWM. 157.15 (much closer to current levels) is the 50-WMA that also must hold up this coming week.
Far right is Biotechnology IBB. Having put distance between its current price and the 50-week moving average, we watch the March high at 116.25. And then, for any downturn that breaks 110.58 (50-WMA).
Bottom left: Regional Banks KRE. If the market does a Gaddafi, this is the first place to look at for a potential short. Not even close to its 50-WMA at 57.58, under last week’s low, 51.78 trouble.
Middle is Retail XRT. Like KRE, weaker and another place to look for a short if the market stumbles. 46.89 the 50-WMA and under 44.50 big trouble.
Far right, Semiconductors SMH. The most impressive of the bunch and the furthest from its 50-WMA at 101.07. With all its strength though, SMH has not cleared the high from a year ago at 114.55.
If SMH begins to turn lower, watch the 110 area. Below there, I’d see it as the “cross this line” you start to die.
No signs yet that we are headed for a price revolt. Nevertheless, better to know the enemies’ coordinates, just in case.
Finally, I haven’t forgotten about food porn-so here is the written recommendation for sugar I did with RealVision in January.
Have a sweet weekend!
S&P 500 (SPY) Swing high at 288.63. Makes 287.60 Friday low important to hold and close above.
Russell 2000 (IWM) 156.70-157.10 cleared for an unconfirmed accumulation phase. That makes Friday low 156.19 important to hold and close above. 159.50 the swing high in early March resistance
Dow (DIA) New swing high at 264.84. Under 263.61 (especially on a close) could be start of some selling
Nasdaq (QQQ) Swing high 184.92-didn’t make a new one Friday. Watch 182.75 to hold now
KRE (Regional Banks) 53.40 now support and 54.25 the 50 DMA to clear
SMH (Semiconductors) New swing high at 112.67 which makes 111.70 the place for this to hold and close above. 114.55 the all-time high
IYT (Transportation) Another new swing high at 193.78 and then did not do much. Watch Friday’s low 192.13 to hold.
IBB (Biotechnology) 115 key pivotal resistance
XRT (Retail) 45.50 now pivotal support.
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