When I first took this photo, I focused on the kiss.
Later, I discovered the drink and the cigarette in the groom’s hands.
Then, I noticed the glass of bubbly in her hand.
“I now pronounce you husband and wife, for better or for worse, including any vices.”
Turns out though, this photo is for their wedding album, staged in Jamaica.
A rehearsal so-to-speak.
In the markets, many are focused on the Russell 2000 (IWM) and how it has “kissed” the rally.
Look deeper, and the bullish love has vices.
Look deeper still, and one wonders whether the IWM’s firmness is staged or for real.
Last week, IWM made new all-time highs at 162.32.
The “vices” were mainly in technology and blue chips.
Semiconductors, NASDAQ and the DIA all lost ground, while the Russell’s gained.
Will this marriage, laden with vices, last?
Rather than IWM’s typical spouse, Granny Brick and Mortar Retail (XRT), he’s rehearsing with his son Transportation (IYT.)
Now, XRT did well last week. Clearing over 46.00, XRT had the highest close since the week of 2/16.
We all know that retail recovered because of strong earnings in many chains.
We also know that XRT has to hold 46.00 to remain a contender.
Transportation (IYT) has to do more than contend.
IYT has to prove to us that the buyers are committed to IWM’s strength.
As mentioned last week, IYT is to IWM as demand is to supply.
Looking around, we see wedding crashers lurking.
A conundrum for the market and for the bulls, is the firmer rates.
The Federal Reserve, uninvited, but always ready to crash a party, should they ease up on their promise to raise rates 3-4 more times this year, will awaken another potential party crasher.
Forget cigarettes and booze. Stagflation is the vice of an overheated economy and geopolitical tensions.
Plus, with rising oil prices, the market could wind up enjoying the wedding, but nursing a nasty hangover.
Nonetheless, should IYT clear 195, and do it on a closing basis, then, we will smoke, drink and dance at the wedding party.
S&P 500 (SPY) 267-268 is max risk here. 270 pivotal. 274 resistance to clear.
Russell 2000 (IWM) 160 pivotal support. 168 area target if 160 holds.
Dow (DIA) Resistance (250) with 245 support to hold
Nasdaq (QQQ) 166.50 needs to hold with 169.50 pivotal resistance to clear