In my book titled "Plant Your Money Tree: A Guide to Growing Your Wealth ", I use weekly charts assuming that a longer timeframe rather than a Daily one to measure the market’s next moves and the macro, is better.
I also introduce the Economic Modern Family in the book.
Weekly phases combined with the incredibly accurate Family index and sectors, are super useful right now.
Coming into Monday, the initial sell-off was significant.
However, the indexes and a lot of sectors popped off those lows. Keeping that in mind, here are 5 weekly charts indicating that the market correction could be coming to an end:
1. Russell 2000
On the weekly chart, the Russell 2000 (IWM) held the 200 and 50-week moving averages.
2. Retail Stocks
Granny Retail held the 50-WMA but is underperforming SPY and breaking the 50-WMA on momentum.
3. Semiconductors
Sister Semiconductors fell to the 50-WMA precisely. However, SMH has hurdles with the momentum declining and the performance underwhelming compared to the benchmark.
4. Long Bonds
Long Bonds TLT have run up but into the resistance levels of last October. Interestingly, the last time everyone called on the Fed to lower rates and were convinced recession was coming.
5. Transportation Sector
The Transports flashed warning ever since March when IYT underperformed the SPY and Real Motion indicated a bearish divergence.
Bottom Line
As this week continues, it will be up to 1 of 3 scenarios to help us decide what is next:
- Bonds break out more (over October highs) and continue higher in a flight to safety, not good
- Semis hold here and resume rally, which in turn spurs on Gramps and Granny to hold and run and the bonds sell off.
- Transportation does not hold Monday’s lows and selling off further-this is the surest sign of whether we see a recession coming.
ETF Summary
- S&P 500 (SPY) 540 resistance with 505 next support
- Russell 2000 (IWM) Sitting on key weekly support
- Dow (DIA) 380 support
- Nasdaq (QQQ) 430 pivotal 420 support
- Regional banks (KRE) 50-52 support
- Semiconductors (SMH) 207 is the 200-DMA support 200 the weekly support
- Transportation (IYT) 61 next support on weekly charts
- Biotechnology (IBB) 140 support
- Retail (XRT) 70 key support
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 76.50 is the support we watched starting in May-now back