Last night after the sell-off, we had this to say:
“For junk bonds and small caps, the next day or two will be very telling on whether this a buyable dip, or the start of a bigger correction.”
We also wrote 4 scenarios that could help you decide your next moves:
- HYG holds these lows and works its way back to 77.00 or the 50-DMA. A close above would be considered strong. (NOT QUITE BUT CLOSE)
- A move under today’s lows in HYG, regardless of what IWM is doing, we would think a bigger correction is coming. (DID NOT HAPPEN)
- IWM, which failed to hold above the January calendar range high and is not that far under the 50-DMA, clears and holds back above 195. Even if HYG just consolidates, we would consider this a positive for the small caps and market. (YAY-THAT HAPPENED)
- IWM cannot clear back above 195 and confirms a caution phase, which will lead us to wait for a test of 185 before buying anything new. (HAPPY VALENTINE’S DAY-IWM HELD)
Furthermore, we noted that Granny Retail XRT did better yesterday and Transportation, IYT held 266. Granny Retail (NYSE:XRT) rose about 1.5%.
iShares Transportation Average ETF (NYSE:IYT) ran up 3.5%-hard to argue with strong transports!
As you can see from the chart, Granddad Russell IWM did its job for today.
ETF Summary
- S&P 500 (SPY) 500 now the pivotal point-490 near-term support
- Russell 2000 (IWM) 195 support
- Dow (DIA) 385 now resistance
- Nasdaq (QQQ) 430 pivotal support
- Regional banks (KRE) Back to the 45-50 range
- Semiconductors (SMH) 200 pivotal
- Transportation (IYT 266 support. 282 the highs so far
- Biotechnology (IBB) 135 pivotal
- Retail (XRT) The Jan calendar range high at 73 now must hold
3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or
remove ads
.