The Stock Market Devil Baits Bulls with Momentum

April 15, 2019

Mish's Daily

By Mish Schneider


At the close of last week, the Russell 2000 IWM, Semiconductors SMH, Transportation IYT and Regional Banks KRE performed well.

Concurrently, Biotechnology IBB and Retail XRT, struggled.

That left us wondering for today:

Will the Modern Family adapt to any environment?

Or,

Will the two absent members of the Modern Family give way to anxiety?

With the recent trend of choppy, low volume sessions, assessing if the Devil will smack down the bulls who keep buying dips, is not so simple.

Yet, if we look at the fruitful side versus the devil side, perhaps we can make more sense of what to do from here.

Should we give in or resist the devil’s momo temptation?

Top left is Transportation. Note how well it rallied last week. Today, it made yet another new swing high and then put in a bearish engulfing pattern on low volume. That puts this sector on alert, but not devil alert.

The Russell’s (top middle), after peeking above the 50-WMA for the second week in a row, today failed it. Again, on low volume.  That makes 157.33 pivotal.

IBB fell all the way down back below its 50-WMA. It is also confirmed a distribution phase.

Bottom left is Regional Banks. Today, it had an inside day, albeit a red one. It also failed to hold the 50-DMA and is back in an unconfirmed bearish phase.

Retail came back a bit today. Support is at the 50 DMA. And if XRT can move back above 45.50, then it has a fighting chance of keeping the devil at bay.

Semiconductors, SMH after a big move higher last week, today, sold off. Thus far, it’s inside the trading range of last week.

If we measure the fruit tray by whether an instrument cleared the 50-WMA, then IYT and SMH sit there like a couple of ripe bananas.

If we measure the fruit tray by whether an instrument is in a positive phase, then IWM and XRT, both above their 50-DMAs, sit there like a couple of green bananas.

And, if we measure the fruit tray by whether an instrument is in a negative phase, then IBB and KRE, both below their 200-DMAs, might have already sold their momo to the devil.

S&P 500 (SPY) Swing high at 290.47 with all-time high 293.94. 288 is the pivotal 10-DMA support

Russell 2000 (IWM) 159.50 the February high. Friday high 158.16 so still a way to go. 156.30 is the support to hold

Dow (DIA) Inside day. April 5th high 264.84. Friday high 264.39. That means must hold 262.70

Nasdaq (QQQ) New swing high 186.07. All-time high 187.53. Has to hold 184.65

KRE (Regional Banks) Unconfirmed bearish phase making 54.29 pivotal resistance with 53.60 some support

SMH (Semiconductors) New swing high at 113.96. All-time high 114.55. Has to hold 112

IYT (Transportation) New swing high at 196.45. Really far from its all-time high. 192.95 the immediate support to hold

IBB (Biotechnology) 110.70 now pivotal resistance

XRT (Retail) 45.50 now pivotal resistance with 44.48 key support

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