Semiconductors have been a significant drag on Wall Street. (SMH) needs to regain its -50 week moving average to really see a major technical shift in the market. SMH 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 provides a critical view of the overall macroeconomic picture.
Presently, every member is trading underneath their 50-day moving average, pointing to potentially more downside and lower overall stock market prices.
Transportation (IYT), the Russell (IWM), and regional banking (KRE) are the closest to their 50-day moving averages, and Retail (XRT), biotech (IBB), and SMH are the weakest.
This week, we are looking at the weekly charts to gain perspective on market moving issues and 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.
The weekly charts show all members are trading lower and displaying negative technical characteristics. The Russell has continued to track closely with the large caps in terms of performance since late December 2021.
KRE is also leading alongside IYT and both need to regain their 50-week moving averages, alongside, the Russell shown below.
Biotechnology 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.
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 15.
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 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