Semiconductors have been a significant drag on Wall Street. Sister Semiconductors (SMH) needs to regain her -50week moving average to really see a major technical shift in the market. She is a good barometer of the overall direction of the stock market.
The “Modern Family” comprises seven key symbols that serve as an overall guide to the stock market and provide a critical view of the overall macroeconomic picture. Please visit our website to learn more about the Modern Family indices, the individual family members and why they are essential as an overall family unit for evaluating the stock market.
Presently, every member is trading underneath their 50-day moving average, pointing to potentially more downside and lower overall stock market prices. Transportation (IYT), Grandpa Russell (IWM) and prodigal son Regional Banking (KRE) are the closest to their 50-day moving averages, while Granny Retail (XRT), Big Bro Biotech (IBB), and Sister Semiconductors (SMH) are the weakest.
This week, we are looking at the weekly charts to gain perspective on market-moving issues, uncovering which areas of the Modern Family are leading and which are lagging from a longer-term perspective. Each family member tends to trade a little differently, but, collectively, they are pointing towards a bearish phase. Please keep reading to learn more.
The weekly charts show all members are trading lower and displaying negative technical characteristics. Grandpa Russell has continued to track closely with the large-caps in terms of performance since late December 2021.
Regional Banking (KRE) is also leading alongside Transportation (IYT) and both need to regain their 50-week moving averages, alongside Grandpa Russell shown below.
Big brother Biotechnology (IBB) is technically the weakest one of all the family members. Already priced under both the 50- and 200-WMAs.
We believe certain companies can perform well in this environment, specific to their respective products and services, pricing power and margin pricing ability, but most companies in these indices are losing value now. Putting all this together signals weakness for the market. However, never discount these weekly support levels.
By keeping the Modern Family in mind, traders can make better informed decisions that will ultimately benefit their trading. MarketGauge’s proprietary indicators like triple play indicator, comparable market phases, downward momentum, volume analysis, and positive trend strength (TSI), can identify trend changes before they happen, giving traders an edge in the market.
To learn more about how to invest in profitable sectors of the Modern Family, reach out via chat, phone, email, or book a call with our Chief Strategy Consultant, Rob Quinn, by clicking here.
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Mish in the Media
In this appearance on Neil Cavuto’s Coast to Coaston Fox Business, Mish gives a quick rundown on how to assess what will happen next.
In this appearance on BNN Bloomberg, Mish covers what to watch for and some picks using tight risks.
ETF Summary
S&P 500 (SPY): 390 level pivotal. 385 support, 400 resistance.Russell 2000 (IWM): 177 support level to hold if any chance of more upside.Dow (DIA): 309.15 a gap low to hold from July 15th.Nasdaq (QQQ): 288 support and, if holds, must clear 297.KRE (Regional Banks): In a bearish phase with key support at 59.80-60.00.SMH (Semiconductors): 204.18 September low thus far. If fails, look at 200 as next level. If holds support, resistance to clear is at 210.IYT (Transportation): 225-226 support and back over 229, a relief.IBB (Biotechnology): 123 resistance, 117 support.XRT (Retail): 61.50-62.00 key support on two timeframes, so worth watching as another leading indicator.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education