After both the Russell 2000 (IWM) and the NASDAQ 100 (QQQ) failed to hold or clear over the 50-Day moving average (blue line), the bleeding has not stopped.
Now that IWM and many key ETFs are near the bottom of their trading range, how should we prepare for next week?
Because we are in a stagflation type of environment with weak market growth and rising inflation, we need to be extra careful with how we trade.
This led us to believe that trading ranges would give us important areas to watch for entries to the long and short side.
As seen in the above chart IWM, and QQQ have been rangebound for some time. Range highs and lows are shown with black lines.
However, we can extend watching ranges to other key symbols such as the transportation (IYT), retail (XRT), and biotech (IBB) ETFs.
When looking at Monday’s trading session, this can help show if we should watch for a bounce near support from the range low or watch for the market to continue breaking down.
If only a couple of symbols break the range low, the weak price action could show that the market is looking to bounce. On the other hand, if the ETFs break lower in unison, we could expect another leg down in the market.
Currently, many traders are watching the market from a bearish standpoint. While this can be helpful at times, it can also be frustrating if the market decides to trend sideways or stay rangebound.
Therefore, keep an eye on ranges in these symbols along with anything you are currently watching for trade setups in.
- S&P 500 (SPY) 415 next support.
- Russell 2000 (IWM) 191 next support.
- Dow (DIA) 336 support area.
- NASDAQ (QQQ) 317 support.
- KRE (Regional Banks) 63.80 next support.
- SMH (Semiconductors) Broke support from 237.
- IYT (Transportation) 243 minor support.
- IBB (Biotechnology) 118 next support.
- XRT (Retail) 73 needs to hold.
- GLD (Gold) 180 pivotal.
- USO (Oil) 73.64 the 50-DMA.
- DBA (Agriculture) 21.83 – 22 support area.
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