In a recent analysis of the current stock market, I stated:
“But, unless the market continues to broaden, we can almost take the Mag 7 stocks outperforming as a lack of confidence…Unless small caps can deliver.”
As we ended this week, clearly the NASDAQ held up better than pretty much everything else.
The S&P 500 had its first red week in over a month!
Inflation numbers spooked the market. The NASDAQ cares less.
Yields rose, which also spooked the market. The NASDAQ cares less.
ECB and Canada cut rates. That strengthened the dollar, which also spooked the market. NASDAQ cares less.
The NASDAQ cares less until it cares more, unless this past week was the correction to buy and not the massive double top we fear might happen in Granddad Russell 2000 IWM.
Looking at the weekly charts,
The Retail Sector (XRT) does not get spooky unless it breaks under the highs of 4 weeks ago or under 81.00. If she is indeed consolidating, this week would be a really great time to let us know that.
The Russell 2000 (IWM) made a top in 2021 and now again in 2024 at around 245. This $13 drop could be nothing. But, like XRT, IWM needs to stop the bleed this week and reverse course back up over 240 to start. Otherwise, we will be watching $217 carefully for if that breaks, a double top becomes more than just speculation.
The Biotechnology Sector (IBB), doesn’t look so big or brotherly. And we were so enthusiastic about it too. This can’t be totally political. But if it is, then I will look to buy a dip here for sure with major support around 130.
Moving down to the chart of the Semiconductors Sector (SMH), she closed higher on the week thanks to Broadcom’s rally. The question now is can SMH clear 260?
The second biggest disappointment this week was the Transportation sector (IYT). Having peaked 3 weeks ago, now IYT is in a daily chart caution phase. IYT must hold here, or we go back to the earlier point that “a double top (IWM) becomes more than just speculation.”
The Regional Banks (KRE) has big support around $60. Plus, after this correction, signs of strength offer investors a look at $65 as a very low risk pivotal point to clear and hold.
Finally, let’s look at the red-hot Bitcoin:
Bitcoin had its highest weekly close ever!
The consolidation over the last 2 weeks has been great for traders to sit back and wait for higher prices still.
We are looking at a $130,000 target by the end of January. At least that is what I said on CNBC Asia in November.
Circling back to the Daily I quoted at the beginning of this one
“Yay growth, but we need confidence in inflation behaving, the US debt decreasing and Trump delivering on the Made in America notion. “
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.
