Stocks reversed course yet again and headed higher today, with the S&P 500 Index (SPX) closing higher by 0.54%.
It’s been a whirlwind of late and there’s plenty of stock market themes and analysis to discuss. But first let’s review key price levels across the major stock market indices and ETFs:
S&P 500 (SPY) – 289.50 pivotal area which means above good was 5 ticks below today’s low. Now, 291.74 the current all-time high.
Russell 2000 (IWM) – 170 still pivotal and this really needs to get at least over 171. 172 even better.
Nasdaq (QQQ) – Inside day. This is the index still working off a reversal topping pattern after making new highs 3 weeks ago. The 50 DMA is at 181.05.
Dow Jones Industrials (DIA) – This has not sold off much in the last several weeks and now, can brag new all-time highs.
Regional Banks (KRE) – 61.26 the 50-week MA-and a key for the end of this week
Semiconductors (SMH) – Confirmed warning phase. In a week this went from bullish to warning to distribution, back to warning and then bullish. Started this week back to unconfirmed warning and confirmed it today. 104.05 the big swing area for the end of the week with the overhead 50 DMA at 106.40 pivotal area to clear/hold.
Transportation (IYT) – 206.70-207.22 pivotal area. If fails to hold, 203 next big support. Otherwise, the ATH is at 209.43
Biotechnology (IBB) – 117.83 the 50 DMA resistance and 115 next support.
Retail (XRT) – 51.80 a good spot for this to recapture. The 50 DMA below is at 50.80
The fairy godmother tells Little Nemo to “proceed boldly over the carpeted path in the sky and to fear nothing as she would be near him continuously.”
I almost feel like ending the Daily right here.
After all, much can be said for the market and its fairy godmother.
Instead, I will review the close to a yet-another-phase-change in Sister Semiconductors (SMH) and the clutch save by Transportation (IYT.)
SMH ended last week in an unconfirmed bullish phase. SMH ended yesterday back in an unconfirmed warning phase.
And today, after a valiant attempt, SMH confirmed the warning phase.
Since we have called SMH our Wonder Woman, does today’s action prove that like the character itself, all the back and forth will lead to a sequel?
Can SMH turn out as the market’s fairy godmother?
Yesterday I wrote, “Should SMH confirm the warning phase, we will have to count on her siblings to take over the dance.”
That is where Transportation (IYT) the sector leader last week comes back in.
Like SMH, IYT has been a bit all over the place.
Several times since May, IYT has roared to new highs, created a topping pattern, corrected, then roared once again to new highs.
Today, IYT did the dance and saved the day.
After a shaky start, IYT closed back above a key critical price point.
However, it needs to do more-like clear the recent all-time high and keep going.
That’s where Sister Semis could help.
First, SMH will need two closes over the 50 daily moving average at 106.40. If not, it must close this week over 104.
Should it improve in phase, a move over 108 will excite buyers.
Finally, regardless of what SMH does, we still have a reversal top in IYT.
That means, to “not-ice anything on the way,” we ultimately must see IYT follow the fairy godmother’s wand.
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The authors may have a position in the mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
