Do You See What I See?
My friend’s garden illustrates the contents of my head concerning the market. Spectacular indeed, with many flowers blooming, some still budding, bees harmoniously feeding and dark clouds forming on the horizon.
Last night we looked beyond the Modern Family to Nasdaq.
Yesterday’s potential reversal pattern in its current Bearish phase confirmed today. QQQs ran up to the January 13th high the day it opened higher and then proceeded to tank. It also ran slightly above last Friday’s high at 106.50.
That makes the market picture equally paradoxical. A reversal pattern confirmed in the Russell 2000 as well. After Tuesday’s inside day pattern, it gapped higher right out of the gate.
Similar to NASDAQ, IWM finds itself staring at significant resistance from both the declining 10 and 50 daily moving averages. That means this rally, after ignoring all the fear that was soooo two days ago, must muster up enough juice to get IWM over the 113.50 area.
The Retail Sector (XRT), another confirmed reversal pattern yet sitting in a Bearish Phase, may just be the rally to short. Sure, it may also have more upside, but it’s an uphill battle for sure.
Then, the Regional Banks Sector (KRE), which as of yesterday was trading in a Distribution phase, today had a Death Cross. With KRE now in a Bearish Phase on the daily charts, it’s the weekly pattern that matters most. The 200 week moving average, which it broke earlier this week, sits right above today’s high.
Even Sister Semiconductors (SMH), our Bullish sibling, stopped right below the fast or 10 day moving average. Therefore, it behooves us to look at the weakest sector Biotechnology (IBB), or the Big Brother of speculative investors.
With IBB back above the trend line it broke down from and above the 200 week moving average, maybe some of that record level money supply is finally convinced that bad news is good news.
