Wednesday, the market continued the prior days' sell-off.
This has placed the overall market trend in a pivotal area as more sectors begin to look weak.
This can be seen in Mish’s Economic Modern Family which consists of one index and 5 important sectors.
Currently, the Russell 2000 (IWM), Retail (XRT), Semiconductors (SMH), and Regional Banking (KRE) are in cautionary phases, with the Biotech space (IBB) sitting in a distribution phase.
A cautionary phase is when the price is under the 50-Day moving average but over the 200-DMA.
This phase normally follows a bullish phase, where the price is still over the 50-DMA as seen in the transportation sector (IYT)
Additionally, because the transportation sector is over its 50-DMA, it is the last sector in a bullish phase within the Family.
This does not look great for the overall market picture and could be showing more chop and a bigger pullback is in form.
With that said, a cautionary phase does not mean we are taking a bearish stance.
Many times, a symbol can trade back and forth between phases before continuing higher or breaking down.
A good example is how IWM has consistently traded between a bullish and cautionary phase for the past 2+ months.
Moreover, we can watch how each Family member performs and if the ones that are still near their major moving averages can recoup back over the 50-DMA.
Recently the transportation sector has been the shining star of the bunch.
However, can it still hold up if most of the Family members are heading lower?
ETF Summary
S&P 500 (SPY) 404 the 50-DMA.
Russell 2000 (IWM) Next main support 208.
Dow (DIA) 333.31 support area from the 50-DMA.
NASSAQ (QQQ) Confirmed a cautionary phase with second close under the 50-DMA at 352.88.
KRE (Regional Banks) Broke support at 67.87.
SMH (Semiconductors) 216.14 next support area.
IYT (Transportation) 260 support area.
IBB (Biotechnology) Second close under the 50-DMA at 146.94 will confirm a distribution phase.
XRT (Retail) Needs to get back over 88.47.
Volatility Index (VXX) 52.02 resistance from 17-Week exponential moving average.
Junk Bonds (JNK) 108.00 support.
XLU (Utilities) 64.29 the 50-DMA.
SLV (Silver) 24.74 support.
VBK (Small Cap Growth ETF) 259.62 support needs to hold or watch for the 200-DMA next.
UGA (US Gas Fund) Watching for follow-through from the breakout of 34.68.
TLT (iShares 20+ Year Treasuries) 135.00 support area. Then 133.19 next.
USD (Dollar) 90.78 the 10-DMA.
MJ (Alternative Harvest ETF) Broke 20.16 support.
LIT (Lithium) 57.90 next support.
XOP (Oil and Gas Exploration) support 82.38.
DBA (Agriculture) 18.74 support