This Tyrannosaurus Rex, that looks very much like a fire rooster, is the bird’s predecessor.
So the Rallysaurus, which some would argue began the market’s road to extinction today, may just be a rooster in dinosaur’s clothing.
After a weekend of tumultuous polices that were met with opposition, the confidence in the market’s ability to maintain strength came into question.
The Dow broke down back below 20,000. Significant? Psychologically perhaps. Technically? Not so much.
However, what could turn out as a much bigger technical issue is the potential island top left in the S&P 500.
An island top fits one of the 5 criteria for establishing a top in any financial instrument.
An island top means after a gap higher (SPY had a runaway gap last week), the instrument then gaps lower leaving a price island that stands alone.
Will our Rallysaurus, in its race to the top, reveal itself a more evolved fire rooster or did it just get smoked?
Looking at the Modern Family, the Russell 2000 fell beneath the 50 daily moving average entering its second unconfirmed warning phase.
Should IWM fail to move higher tomorrow, the next point to gauge how the other indices might ultimately perform is if IWM can or cannot hold the January 6-month calendar range low 133.59.
Granny Retail (XRT) is another piece of the puzzle. A possible reversal pattern with decent volume could take Granny from near coma to up and shopping.
Transportation (IYT) may have put in a double top. However, it holds in a bullish phase. Biotechnology (IBB), already discounted as the weak link, can still play a role.
Higher levels in IBB will bring around buyers. A collapse under 264 should create even more problems.
Semiconductors (SMH), our sister, offers the best evidence for an extinct dinosaur now prancing around in rooster’s clothing. SMH held up extremely well.
Lastly, Regional Banks (KREÂ ) could see 52.00 (lower) over the course of a few weeks provided it cannot clear back over 57.00.
