The Market and its Piles of Dormant Trading Tools

We went to an art restorer’s studio with our friend who deals in art antiquities.

Scattered among the ongoing projects that sat at different levels of restoration, was this framed sketch of what looked like an Ancient Roman philosopher, surrounded by hundreds of bundled, colored pencils.

What does this have to do with the market?

The philosopher reminds us that certain adages about trading stand true:

  1. Never short a dull market.
  2. Never fight the Fed (assuming the market is right about a rate cut)
  3. History repeats itself.

The bundled pencils remind us that we have lots of tools available. However, while those tools are dormant, best to wait out any aggressive investing.

Check out the weekly charts of the economic Modern Family.

The Russell 2000 IWM-maybe dormant, maybe failing the 50-WMA (blue line), which would be a sell signal if confirms.

Regional Banks KRE. Under resistance and above support-dormant.

Transportation IYT. Better, but inside last week’s trading range thus far so dormant.

Retail XRT, dormant as well, but heading more towards the sell side.

Biotechnology IBB-not as negative as XRT, but also dormant as it holds inside last week’s trading range.

Semiconductors SMH-the only one not dormant. Clearly the market restorer has been busy working on this project. Now we look to see if it clears April’s high. So for now, skewed risk/reward, therefore dormant.

Perhaps we can say the market right now, is like watching paint dry or like a dormant bundle of pencils.

Until that rubber band pops, best to find something else to restore.

S&P 500 (SPY) Inside day. Could not get through 300 and now must hold 295 underlying support. Subscribers: Negative Pivots in all except QQQ

Russell 2000 (IWM) 154.30 is the major pivotal 50-WMA with resistance at 155.35. Underlying support at 152.84 the 50-DMA

Dow (DIA) 273.99 all-time high. 270.75 pivotal support holding

Nasdaq (QQQ) Inside day. 192.25 pivotal area. 188 next area of support. Resistance 194

KRE (Regional Banks) 53.40 pivotal. 52.70 key area to hold.

SMH (Semiconductors) 117.21 now the support to hold

IYT (Transportation) 189.30 the 10-DMA support to look at with resistance at 192.40

IBB (Biotechnology) 105.20 the 50-DMA pivotal Unless it clears, 103 in focus.

XRT (Retail) If can clear back over 42.80 better. If not, just went into an unconfirmed bearish phase