Looking at the daily S&P 500 chart, we can see we are sitting on the hump this fine Wednesday.
By the hump I mean that given the negative sentiment to start the day, SPY rallied and closed just above the 50-day moving average and with a possible return to a bullish phase.
Now that is SPY.
What will help get us over the hump is if it confirms with a second close tomorrow over the 50-DMA.
Note that the Leadership on the SPY chart is comparing its performance to the long bonds TLT.
Here is another area of concern. SPY is underperforming TLT which is typically risk off.
However, junk bonds continue to hold their leadership which suggests that the 2 risk factors of SPY: TLT and TLT: HYG cancel each other out.
And what would help even more is if the transportation IYT sector continues to hold its 50-DMA.
On the Daily chart of IYT, this too reversed from the morning sell-off to clear the 50-DMA.
While IYT now slightly underperforms SPY, momentum continues to look weaker with the bearish divergence.
Bottom line is that this perfectly defines what a hump day is all about.
To get over the hump for the bulls we need another day of gains in both the S&P 500 and in the Transportation sector.
And should we not confirm the positive phase changes on Thursday, then we can say the hump was a bit too unstable for bulls to hang on.
ETF Trading Levels Summary:
(Pivotal means short-term bullish above that level and bearish below)
S&P 500 (SPY) 5400-support level held now we look at 560
Russell 2000 (IWM) 210 pivotal
Dow (DIA) 400 support
Nasdaq (QQQ) 465 now pivotal
Regional banks (KRE) 54 pivotal
Semiconductors (SMH) 230 pivotal
Transportation (IYT) Has to hold above 65 clear 67.00
Biotechnology (IBB) 137 area support 145 pivotal
Retail (XRT) 73.50 resistance to clear
iShares iBoxx Hi Yd Cor Bond ETF (HYG) Still very much risk on
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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.
