First, let's get to know some facts about the July Calendar Range. The Six-Month Calendar Range has the following characteristics:
- It provides directional bias for the next 6 to 12 months.
- January and July divide the year.
- Simple levels matter alongside the right indicators and tactics.
Overall, we look at 2 simple things.
- If an instrument breaks out of the range or breaks below with momentum and price and then has follow-through.
- If an instrument breaks out or down and then reverses back into the calendar range high and low.
In the case of Granddad Russell 2000 and Granny Retail XRT, both instruments closed above the calendar range high (green horizontal line).
Both IWM and XRT are outperforming the benchmark.
Both have good momentum in our Real Motion indicator, however, IWM is stronger than XRT.
The inverted doji candle on the IWM chart is quite pretty. Generally, that means a lot of forced selling.
Here are the reasons why:
Looking at the chart of NASDAQ and the S&P 500, we see a different picture.
QQQs not only failed to clear the July range high but is close to the July range low.
QQQs are outperforming SPY.
The momentum indicator shows that this move could be overdone as the dots landed right on the 50-DMA.
SPY also failed to clear the July range high. Yet, it is far from the July calendar range low. Momentum, like QQQs, remains intact.
That tells us that the small caps and retail could easily continue to lead the market up or at least outperform the QQQs and SPY.
And it is also possible that should QQQs and SPY fall further, IWM and XRT will also trade lower.
Then, we will watch for any failure of the July range high. For now, it seems that QQQ and SPY are overdone.
If so, we expect IWM and XRT to continue to either consolidate at these levels or have another leg up.
Remember, 227 in IWM is the last gasp high from January 2022 and is an important level.
Every instrument has been put in a July 6-month calendar range currently.
With a new bifurcation in the overall market, it is important to know where the calendar range sits in any instrument.
ETF Summary
- S&P 500 (SPY) 5600 pivotal
- Russell 2000 (IWM) 217 now key support
- Dow (DIA) New all time highs -industrials strong
- Nasdaq (QQQ) 500 resistance 477 support
- Regional banks (KRE) 55 now support with 60 next level to watch
- Semiconductors (SMH) 260 now pivotal resistance
- Transportation (IYT) 67 now support
- Biotechnology (IBB) I still like this sector-152 resistance
- Retail (XRT) Granny got her groove-now 77.50 support
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) Multi-year highs with some consolidation