Weakness To Be Expected

It should be no surprise that that market was weak on Tuesday.

On Monday the Modern Family was generally weak with IWM leading the way lower.

A cursory look at the patterns of the charts of the modern family shows how similar their patterns all are.

Rally into a downward sloping moving average, stall, and then begin to roll over.

With a picture like this, weakness will likely lead to more weakness.

The media will always frame the day’s price action in the context of the news events.

However, news events that are not unexpectedly bullish or bearish are secondary determinants of the market’s direction.

The mood of the market and Modern Family is such that, in the absence of any unexpectedly bullish news, the market’s likely direction is sideways or down.

When will this change?

  1. If there is unexpectedly bullish news.
  2. When time and price action work off the bearish tone. This could happen with a move down into support areas, or sideways action that builds the confidence of the bulls.

Until the Modern Family cheers up. I’ll remain cautious.

S&P 500 (SPY) Until it closes over 295 look out for weakness. Key support areas are 293.50 and 291.50

S&P 500 (SPY)  Key support areas are 290 and 287.80 which is price level and 50-DMA. Resistance at 292.80.

Russell 2000 (IWM) Stopped at 151 support, but still weak. The next big level to hold is 148.50.

Dow (DIA) until a close over 268 look out for more weakness. 264 may offer support, but the bigger number is 263.

Nasdaq (QQQ) 186 is now resistance. 183.80 is support and 50-DMA.

KRE (Regional Banks) Nice recovery from 51 support.  Overhead resistance at 53.50

SMH (Semiconductors) Broke consolidation, now sitting on 10-DMA. Support at 104.60. Resistance from 108 to 108.50 – the 50-DMA resistance

IYT (Transportation) Bearish breakdown continues. Must clear 190 to look good. 180 is next support to hold

IBB (Biotechnology) Relatively stable and over 10-DMA. Support at 106. Needs to clear 110 to be bullish

XRT (Retail) Breakdown under pivotal 42 level continues. 41.00 is significant support