December 8, 2018
By Mish Schneider
Simon and Garfunkel wrote “Leaves That Are Green” to describe losing the love of a girl as she faded into the night.
On my driveway, I found this lonely leaf that changed from green to brownish-red.
Hence, my thoughts turned to the market and that song.
Bulls have lost the love of the market as prices fade into the night.
With another dismal week, what has become clearer is that the attempts to talk up a deal with China, the strong economy and downplay the impact of the Mueller investigation, is falling on deaf ears.
And look at that leaf.
Do you see a fading face like the fading market?
Last Thursday night we examined the weekly charts of the economic Modern Family.
The last shot for the bulls was for the Russell 2000 IWM.
After making a new 2018 low early Thursday, IWM had a strong rally with big volume.
However, it had to confirm by closing above Thursday’s high (147.20).
Retail XRT needed to hold its recent low at 43.75.
Biotechnology IBB tested the 200-week moving average. But did that hold?
Regional Banks KRE, had not failed its recent swing low at 50.69.
Yes, still hasn’t. Best hope?
Semiconductors SMH do not look great, and haven’t for awhile, so did that show any signs of a bottom?
As we have not taken our eyes off the rates, dollar and oil, rates eased, dollar weakened and oil firmed some.
That means to me, the potential for stagflation grows closer.
Just the opposite of the fallen leaf. This scenario appears to be budding.
S&P 500 (SPY) Unconfirmed Bearish phase. 270 is the number this has to clear. The big support at 262.50 held. For now.
Russell 2000 (IWM) 143.27 the new 2018 low. Unless this has a dramatic turnaround, it’s not even oversold.
Dow (DIA) Held 242 support. 250 pivotal resistance
Nasdaq (QQQ) Needs to move back above 170 and hold 160.00
KRE (Regional Banks) 50.69 the magic number to hold.
SMH (Semiconductors) 90.00 pivotal resistance with 86.95 recent low
IYT (Transportation) 175.50 recent low and back over 190 way better
IBB (Biotechnology) 104.75-105 major resistance
XRT (Retail) 42.70 2018 low. 44-45 resistance
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