Reality Sets into the Economic Modern Family
The week right after the election, the Family was downright jubilant.
This past week, the best word to describe them as is disappointed.
Disappointed is not as bad as say, dismayed.
Nonetheless, all the gains after the elections dissipated.
Some of the responsibility lies with the Fed after the bit hotter CPI and PPI numbers and Powell’s statement that he sees no hurry to lower rates.
The Family wants lower rates. The Family likes certainty.
Adding to the uncertainty Powell’s statements created, the onslaught of changes henceforth with the new administration is confusing as well.
Big Brother Biotechnology suffered the worst blow with the announcement of RFK Jr head of Health and Human Resources.
However, each one of the sectors and our Granddad Russell 2000 (IWM) empathized to a degree.
The 6-chart screenshot is of weekly charts. The 50-WMA is in blue, the 200-WMA in green.
Starting with Granny Retail XRT, I am totally sticking with the notion that the consumer will tell us all.
Speaking of disappointment, XRT failed to rally above the $80 level, the top of the 10-month consolidation.
XRT though, did at least hold above $78 and could easily reverse up this week.
Granddad Russell 2000 IWM, if you zoom out, failed to make a new all-time high from the one IWM made in 2021.
Double top? Maybe. IWM must fail 200 first. That’s a long way down.
Biotechnology IBB, the good news, is that it never took out 150 to the upside so it never had a true range breakout.
Now, this week it gave up 23 weeks of price action! I thought we’d not see 132 support levels again for a long time, but here we are.
Sister Semiconductors SMH also disappointed. Though we must remember that she has underperformed since the July peak. This week NVIDIA (NASDAQ:NVDA) reports. Could that save this sector?
One important thing to note-SMH has not failed the 50-week moving average since early 2023. And a move over 260 would be healthy.
Moving on to the rest of the Family:
And the winner is-our newest member of the Family-Crypto! He is a millennial for starters. And he loves a pro-crypto administration.
Firing on all cylinders, Bitcoin looks poised for 100k before we reevaluate.
Not quite as exciting, Transportation IYT did have an inside week after the spectacular move to all-time highs the week prior.
That is good news should IYT hold above 69 and clear 74.00.
It also means that the Dow theory is alive and well with the optimism of a more robust US economy. This is why we are watching the retail sector so carefully.
Finally, Prodigal Son Regional Banks KRE, held the breakout area or $65.
Also a good sign if that continues this coming week.
This week watch Granny first and foremost. Then of course, NVIDIA Corporation (NASDAQ:NVDA) and what the tech sectors does after it reports.
As mentioned at the start of the Daily, disappointment can switch back to joy before it becomes dismay.
Both joy and dismay are infectious.
ETF Summary
- (Pivotal means short-term bullish above that level and bearish below)
- S&P 500 (SPY) 575 support 600 resistance
- Russell 2000 (IWM) 227 support 244 the area to clear
- Dow (DIA) 430 support
- Nasdaq (QQQ) 500 now pivotal
- Regional banks (KRE) 65 pivotal
- Semiconductors (SMH) 235 the 200-DMA to hold 250 resistance
- Transportation (IYT) Looks good if it holds over 71
- Biotechnology (IBB) 132 support 138 now resistance
- Retail (XRT) 78.50 key pivotal support
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 79.50 pivotal
