Sometimes, you head out on a trail with a specific route mapped out.
Other times, you head out and see an unexpected trail to follow.
Last weekend, we started out hiking a well traversed trail. Suddenly, an arrow pointing to the right appeared. Written on the arrow was the word “Trail.”
We spontaneously decided to follow that arrow. To ensure we would not get lost, we built a cairn. Once we made the right, we happily discovered this trail was clearly marked.
We figured that a well-marked trail was a compelling sign to keep walking.
The trail took us to an overlook. Planted at the overlook stood this cross.
Trading the current market, given all the uncertainty, requires one to plan a specific route.
Nevertheless, one must also prepare to exercise flexibility to change directions when signs appear.
What are the specifics to follow this week and what signs could appear to cause traders to change course?
The Specifics:
Not one member of the Modern Family is in a Bullish Phase.
The Russell 2000 ended last week on its lows and in a warning phase.
Retail (XRT), instead of taking out the 50 daily moving average, may have formed a new top around 42.50. In the bearish phase, XRT stands to lose a lot more ground.
Semiconductors (SMH) confirmed the warning phase. First time since June 2016.
Transportation (IYT) and Regional Banks (KRE) ended on their lows with the Warning Phases in acceleration.
Biotechnology (IBB) found support ending the week green. That seems somewhat ironic to me that pharmacology could save the market.
Other Specifics:
The 20+ Year Treasuries and Gold ended on new multi-month highs.Volatility or the fear factor increased.
What signs could appear?
The 50 day moving averages in the S&P 500 and the Dow indicate sluggish warning phases as the slope on the 50 still rises. Watch for signs of buyers returning.
Nasdaq 100 remains in a bullish phase. Watch for signs of a move over 132.
