For those of you who do not know much about me, I wrote a book called Plant Your Money Tree: A Guide to Growing Your Wealth.
The main thrust of the book was about market phases, of which we use 6.
In the book, I use weekly charts assuming that a longer timeframe rather than a Daily one to measure the market’s next moves and the macro, is better.
I also introduce the Economic Modern Family in the book.
Weekly phases combined with the incredibly accurate Family index and sectors, are super useful right now.
Coming into Monday, the initial sell off was significant.
However, the indices and a lot of sectors popped off those lows.
What now?
On the weekly chart, the Russell 2000 IWM held the 200 and 50-week moving averages.
Granny Retail held the 50-WMA but is underperforming SPY and breaking the 50-WMA on momentum.
Sister Semiconductors fell to the 50-WMA precisely! However, SMH has hurdles with the momentum declining and the performance underwhelming compared to the benchmark.
Long Bonds TLT have run up but into the resistance levels of last October. Interestingly, the last time everyone called on the Fed to lower rates and were convinced recession was coming.
The Transports flashed warning ever since March when IYT underperformed the SPY and Real Motion indicated a bearish divergence.
As this week continues, it will be up to 1 of 3 scenarios to help us decide what is next:
- Bonds break out more (over October highs) and continue higher in a flight to safety, not good
- Semis hold here and resume rally, which in turn spurs on Gramps and Granny to hold and run and the bonds sell off.
- Transportation does not hold Monday’s lows and sells off further-this is the surest sign on whether we see recession coming.
Twitter: @marketminute
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.
