January 10, 2019
By Mish Schneider
You all know the story of the Tortoise and the Hare.
Although the Hare is way faster, it’s the plodding and consistent Tortoise that wins the race.
The Galapagos Tortoise lives an uncomplicated life.
They graze, bask, nap and can survive without eating or drinking for up to a year.
We traders need to emulate the Tortoise, especially in the current market environment.
By that I mean, we need to trade with as little complications as possible.
And, just as a Tortoise has a hard shell to protect them, we need to make sure we have just enough on so that if there is a profit drought, we are protected.
Yesterday, we examined the negative fundamentals that can take hold of the market at any time.
Furthermore, from a technical standpoint, we see that all the indices and five of the six Modern Family members are in Bearish phases.
However, just as a Tortoise’s slow pace should not be underestimated, so as the adage goes, “Never short a dull market.”
That begs the question, how do we protect and position ourselves, if this is the calm before the storm?
While the momentum is up, raising stops on existing long positions is smart. Plus, carefully picking anything new from the long side is smart.
The indices have to improve phases. If they cannot, that’s a sign, especially if they close red and break support levels listed below.
If they do, don’t overthink or get too complicated. Follow the improved phases up.
Plus, watch the weekly charts.
IBB, the Russell’s IWM, Transportation IYT and Semiconductors are all still in Caution phases (above their 200-WMAs but below their 50-WMAs).
Retail XRT and Regional Banks KRE are both in Distribution Phases (under both the 50 and 20-WMAs).
Either XRT and KRE will play catch up, or, they will drag IBB, IWM, IYT, and SMH back below their 200-WMAs.
Please join me tonight at 8:00 PM EST for a free webinar where I teach you How To Grow Your Wealth & Income In Bull & Bear Markets-Without Time Consuming Analysis.
S&P 500 (SPY) 258.91 is pivotal resistance with best underlying support at 255.
Russell 2000 (IWM) 140 best underlying support and unless this can clear 145, we could see that number soon.
Dow (DIA) 235 pivotal support-244.60 is the 50-DMA
Nasdaq (QQQ) The 50 DMA at 162.50. Support at 156
KRE (Regional Banks) A weekly close over 50.25 it gets interesting or a failure of 48.00
SMH (Semiconductors) 88.40 pivotal support. 91.20 the 50 DMA.
IYT (Transportation) This still has a long way to go to see the 50 DMA at 179.35. So for now, a close under 170 would not be a good sign
IBB (Biotechnology) 110 next resistance with 106 closest support
XRT (Retail) Big failure today after poor retail earnings. 42.25 support and back over 44 better with the 200-WMA looking at 44.80