On The Edge Of A Break Down

Today’s commentary is by Geoff Bysshe, MarketGauge President, who’s filling in for Mish until August 24th.

It’s the weekend, so I’ve prepared the weekly charts of the modern family with important trend and support lines.

Considering the big moves in the following assets Friday…

  • Gold and silver up
  • Bond up
  • Stocks down
  • The dollar down
  • The Yen up

The weekly perspective is an important one right now.

It’s hard to believe that even after Friday’s sell-off, none of the modern family closed below last weeks low.

That said, IYT, IWM, and XRT are all sitting on ‘must hold levels’ (black lines).

IYT and IWM are in weekly warning phases, so they have their 200-week moving average below them.

That support is about 3% lower in both cases, but I would brace for bigger declines than 3% if they break this week’s lows.

XRT is very close to a weekly bearish phase, so if it breaks its ‘must hold level,’ further declines should be expected.

KRE closed below its ‘must hold level,’ and it’s below its 200-week average.

It’s still positive for the year, but this week it closed below every swing low in 2019. The next swing low is the December 2018 low.

IBB is stuck in a range on its 200-week average in a warning phase.

Remarkably, SMH remains in a bullish weekly phase.

The big picture looks very bearish with so many charts on the edge of a breakdown. This also means they’re sitting on support.

I won’t be surprised by a big move in either direction.

And I expect that any further weakness next week could accelerate the markets’ declines.

The key charts points to watch will be the recent swing lows in SPY and QQQ.

ETF Levels:

S&P 500 (SPY) Support 282.40-281.70 then 200 DMA at 280. Resistance at 290 then the 50-DMA and swing high area, 294.

Russell 2000 (IWM) Must hold swing low of 144.79. Next support area is 200-week average at 140. Resistance around 149 area, then the 200 DMA at 151 then 152.70.

Dow (DIA) I’d just focus on range low, 254 and range high 264.60.

Nasdaq (QQQ) Support at swing low at 181 area then 180 area. Resistance at 186 then the swing high at 189.70.

KRE (Regional Banks) Support at Friday’s low, 48.40, then 46 area. Resistance at 49.50 to 50.00 then at the range high at 51.70 then 51.50.

SMH (Semiconductors) Support at Friday’s low, 109.30, then 108.60 and 107.40. Resistance at 112.50-113, then 116.

IYT (Transportation) Must hold 174.50. Next support is 200-week average at 170. Resistance at 180.

IBB (Biotechnology) Support area 102-101.40, then May swing low at100 Resistance at 104. Looks interesting if it can close over 107.

XRT (Retail) Support area 38 to swing low at 37.46. Resistance at 39.60 and 40.22.