These Market Big Guns Are At Make Or Break Points
Michele Schneider | Jul 26, 2020 03:07AM ET
In the world of large-cap and tech stocks, Friday was an interesting trading day.
Lots of those stocks touched down on their 50-DMA.
To name a few: JD.com (NASDAQ:JD), Baidu (NASDAQ:BIDU), iQIYI (NASDAQ:IQ), Netflix (NASDAQ:NFLX) and Microsoft (NASDAQ:MSFT).
With sentiment or risk on/off gauges flashing bearish, these big guns are at make or breakpoints for Monday.
Any of these could leave more distance between them and their 50-DMA.
Or, they can easily break them and lead the whole market significantly lower.
After enjoying a week or so of low volatility, the past week ended with fear returning, thereby forcing traders to pay more attention.
The dollar declined even further, while the metals-gold, silver, palladium, copper, and Platinum held gains or posted more gains.
The 20+ Year Treasury Bills also rallied, however right into key resistance.
Bonds may not turn out the traditional safety play one would expect given the turn up in commodities and the turndown in the greenback.
And also noteworthy is that Junk Bonds JNK, rallied Friday closing above the 50-week moving average. This is the best example of “Don’t Fight the Fed!” (especially ahead of the Fed meeting)
Yet, quietly, reliably and clarifyingly, our Economic Modern Family will help us decide what to do this coming week. A week by the way, with lots of earnings on tap.
Now back to the Family.
Granny Retail is doing the heavy lifting, which is amazing considering XRT (mainly brick and mortar) has lagged for years.
Granddad Russell 2000 IWM failed to close above the 50 and 200-WMAs. It will come down to who is stronger for the whole market, I believe. Can XRT drag IWM up or vice versa?
Big Brother Biotechnoloy IBB proves the harder they are, the harder they fall. However, unless it breaks below the channel line, this is a healthy correction.
Prodigal Son Regional Banks KRE gave the market a pass by not breaking down completely. The question now though, is can banks hold the recuperation phase and move up further?
Our Tran, IYT, touched but could not clear the 50-WMA on a closing basis for the week. But it was an inside week. That means there is a lot of room down, and if Granny and the big gun stocks hold, the potential for it to clear the last 2 weeks highs.
Sister Semiconductor SMH did exactly what I wrote about a week ago- “The top of the channel comes in at 165-168 serving as resistance… if SMH gets to the top of the channel, cannot clear, and begins to turn lower, I would have no issue going short into failed strength.”
Get The News You Want
It seems relatively simple to me.
Watch Retail. Watch the NASDAQ stocks that retraced to their 50-DMAs. Watch JUNK bonds and the dollar.
If they all hang in there, do not get sucked into the headlines.
If the dollar falls much further, or any of these others cannot hold, perhaps the punch has truly worn off.
S&P 500 (SPY) 320 held and has to continue to
Russell 2000 (IWM) 146 support 150 resistance
Dow (DIA) 270 now resistance 262.50 support
Nasdaq (QQQ) 262 now resistance with support at 250
KRE (Regional Banks) Confirmed recuperation phase. 37.70 the 50-DMA
SMH (Semiconductors) 160 pivotal 155 support
IYT (Transportation) 172.75 the 200-DMA failed to hold
IBB (Biotechnology) Closed at 136, the big support
XRT (Retail) 45.00 support, 46 pivotal
Volatility Index (VXX) 31.03 resistance
Junk Bonds (JNK) Cleared 104.95
LQD (iShs iBoxx High yield Bonds) Gentle correction
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.