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Will Decaying Market Bears Reignite?

Published 01/12/2020, 04:52 AM
Updated 07/09/2023, 06:31 AM
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As far as the market, with all indices closing red on Friday. Will the decaying bears reignite?

Indices Weekly Charts

The overall picture of the six members of the Modern Family does not look bad. In fact, one could say that the red close Friday in all six members is nothing more than a healthy correction.

1. Semiconductors

So with that in mind, let's start with the Semiconductor ETF (NYSE:SMH). After a doji week last week, this week we had a bearish engulfing pattern.

That means that after squeaking out a new all-time high, SMH closed in the lower end of the trading range for the week. A move under 139.77 (this [ast week’s low) should be duly noted as possible exhaustion.

2. Transportation

In terms of the Transportation Average ETF (NYSE:IYT), we saw weekly bearish candlestick. The 200 level continues to elude our very important sector. However, IYT made up some necessary ground this week. Now, it should hold 195 or we will be back looking at 190.

3. Small Caps

The Russell 2000 ETF (NYSE:IWM) appears more like a gentle correction than a top, need I remind you that it continues to lag way behind the S&P 500.

4. Retail

After news of Macy’s (NYSE:M), Pier 1 (NYSE:PIR) closing stores along with Bed Bath & Beyond's (NASDAQ:BBBY) earnings woes, brick and mortar is our weakest link. Until Retail ETF (NYSE:XRT) can make a stand over 46.00, we look at this as the slowing economy broadcast.

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5. Biotechnology

The weekly chart for Biotechnology ETF (NASDAQ:IBB) shows a classic middle finger formation. Unless it clears 122, that could mean lower levels. Furthermore, it could signal the coming end of the market euphoria.

6. Banking

Finally, we have the Regional Banking ETF (NYSE:KRE). This week starts bank earnings season. KRE’s weekly charts also looks more like a correction than a top. However, on the daily chart, KRE sits right on the 50-DMA and is flirting with an unconfirmed caution phase. A move under 55.95 should yield more selling.

As equities have become hot enough to start a forest fire, with this correction, we may have smoked out the bears from hibernation. Nevertheless, bears ought to take heed so they do not get burned again.

And bulls, also take heed as the jobs report indicates what I believe is coming- a slowing economy and rising inflation.

S&P 500 (SPY) The makings of a reversal pattern if fails 323.62.

Russell 2000 (IWM) Failed the 10-DMA and must hold 163.70 support or we are looking at 161.90

Dow (DIA) The makings of a reversal pattern and bearish engulfing one as well. 286.88 support to hold.

Nasdaq (QQQ) The makings of a reversal pattern and bearish engulfing one as well. 215.44 pivotal support

KRE (Regional Banks) Sitting right on the 50-DMA-a must watch Monday

SMH (Semiconductors) Possible reversal pattern with support right at Friday’s low that must hold by the close to avoid more selling

IYT (Transportation) 195 pivotal area. 200 key resistance.

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IBB (Biotechnology) 121.91 resistance and 115.50 support

XRT (Retail) 45.41-46.00 pivotal resistance. 44.78 the 50-DMA

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