Up Against The Wall Market Modern Family!
Why does this woman have her hand pressing on the stucco wall? ? Is she a time traveler trying to find a portal? Is the Rallysaurus beckoning her across? Or, is she testing the resolve of the wall, feeling for cracks in the foundation? Is the wall merely an illusion?
Today the market heard the long-awaited Fed announcement. Long-awaited since most of us already knew the outcome yet still had to wait for it. Afterwards, the Modern Family pressed its hand against a stucco wall. They may have finally found the portal.
The wall represents the macro picture of the market. The Rallysaurus affixed to the wall (real or imaginary) has dominated the market over the last 8 months. Certain sectors of the macro trends have passed through the wall to the other side. Others still have their hands pressed against it, concerned about it crumbling.
What is affixed to the wall on the woman’s right? Skin the Rallysaurus has shed? A warning sign? For the illusionists out there: A flying headless stingray?
Let’s first assume the Rallysaurus shed some skin. Normal for lizards therefore no reason to be alarmed. That “shedding” could explain the recent selloff and test of support levels in Retail and Transportation.
If the Rallysaurus has donned new skin, we should see Retail (XRT) hold 43.00 and Transportation (which got a boost from positive earnings in FedEx) hold 140. That would give the macro picture a boost.
Semiconductors, already time traveling to a future somewhere in the twilight zone, would continue her journey north. Biotechnology, trying in earnest to pass through the wall, should journey beyond 300.
Furthermore, the Russell 2000 will clear 124.50 and head to 130.
With Nasdaq making another new 16-year high, one would expect the Rallysaurus wall to open its portal to everyone.
Yet we know that besides Retail, Regional Banks, are also super important to the whole macro picture. KRE measures how much business smaller communities are doing. Savings and loans in community banks across the country continues to lag.
Therefore, with the Fed doing its darndest to prevent blocking a rally’s passage, the Modern Family is up against the wall once again. Will they find a portal this time? A roadblock? Or, will they just suspend disbelief and climb atop the flying headless stingray?
S&P 500 (SPY) 212.00 critical support to hold with a move over 216 better
Russell 2000 (IWM) 122.10 level pivotal support. Through 124.50-way better
Dow (DIA) After 9 attempts to see if the gremlins at 18k in the Dow are back, today seems to be the day DIA decided it’s safe
Nasdaq (QQQ) Now that we are here, do not want to see a reversal
KRE (Regional Banks) 41.25 the 50 DMA to defend and need to see it clear 42.30 area
SMH (Semiconductors) Must clear 67.68
IYT (Transportation) 144-146 the resistance to clear
IBB (Biotechnology) Do I hear 300?
XRT (Retail) Clutch hold of support. Still need to see a move over 44.17
IYR (Real Estate) Over 81.20 better
ITB (US Home Construction) If good, today’s low should be the bottom
GLD (Gold Trust) 126 pivotal with now an unconfirmed bullish phase
SLV (Silver) Back over the 200-week MA. If sticks very bullish
GDX (Gold Miners) 27 support 29 next resistance
USO (US Oil Fund) More interesting but still need to see it clear the weekly moving average
OIH (Oil Services) Reversal in the works-and a good one
TAN (Guggenheim Solar Energy) There’s nothing I would like better than to see this hold the 2016 low and run
TLT (iShares 20+ Year Treasuries) Today’s high resistance so watch this 136 level now
UUP (Dollar Bull) Until it closes over 26 or under 24.60 I’m neutral
EWP (Spain) Looks very good here
Disclosure: None.