What is truth in the market?
Truth can be interpreted in many different ways.
One person’s truth is another person’s falsehood.
For instance, two of my Daily’s were dedicated to the Volatility index and that after seeing a unique technical pattern, a big move (probably down) was coming.
That “truth” was met with sneers by those who wondered how I could question their truth-or the one that showed the S&P 500, Nasdaq 100 and the Dow making new all-time highs.
One lesson of trading, is that with truth open to interpretation, best to not violently (metamorphically speaking) tear down anyone else’s truth.
What is true one moment may not be true the next.
And this is where self-righteousness comes in.
The worst quality a trader can have is self-righteousness. Why?
Traders need to get used to being wrong, and changing their opinions on a dime. The market cares nothing about our truths or convictions.
In fact, I have seen so many traders confront me in a verbally violent way, only to see their confrontations turn into foolishness.
Price does not lie. They keep me from looking foolish.
The weekly charts, if you recall, showed two of the economic modern family maintaining an inside trading week.
Transportation (NYSE:IYT) and Retail (NYSE:XRT) closed holding that inside week pattern.
That makes it easy.
If Monday begins with either or both breaking under 188.93 in IYT or 42.90 in XRT, that will be truth. At least until it’s not.
If they hold, considering that the rest of the Family is relatively far from breaking down (with the exception of Regional Banks (NYSE:KRE) sitting on the 50 and 200-WMAs), then the other truth will be that this market remains robust and either sector is a low risk buy against the lows mentioned above.
Regardless, if you are tired of your own foolishness, then try not to get attached to any one truth.
S&P 500 (SPY) New all-time highs at 334.19. 332.90 pivotal. Support at 327.87
Russell 2000 (IWM) 165.56 pivotal as this held the 50-DMA at 164.68. If breaks there, see 163.50 next.
Dow (DIA) 294.14 the all-time high and 288 underlying support
Nasdaq (QQQ) Made a new high and then closed lower. Must hold 228 then 224.00.
KRE (Regional Banks) Confirmed caution phase-53.90 must hold support and back over 56 better
SMH (Semiconductors) Unless this clears 147, see 141 next support
IYT (Transportation) Confirmed caution phase. 193.70-195.33 the narrower range to watch first
IBB (Biotechnology) 119.90 support and still one of the better looking sectors right now
XRT (Retail) Watch that low 42.90 to hold and if can get back over 44.05 and hold, better
Volatility Index (VXX) I would have like to see this close over 14.40-now pivotal