This is a good time to step back and gain some perspective on my Economic Modern Family as the market anticipates
- Lower interest rates
- Lower
- Weaker
- Weaker
- Growth leading
I start with Transportation looking at the weekly chart.
When step it back, it looks weaker than the growth stocks, however, the chart suggests nothing more than noise right now.
IYT is in a weekly bullish phase, underperforms the benchmark and the momentum is waning but not critical.
If we compare IYT to Sister Semiconductors …
We see a test of the all-time highs. SMH far outperforms the and momentum is good but not amazing.
The point is, we continue to watch for more signs that SMH can keep the party going for everyone else.
Meanwhile, looking at everyone else..
Granny Retail is merely having an inside week meaning that this week’s range thus far is within last week’s trading range.
Same is true with Granddad ().
What can we make of that?
More bullish than anything else as both are holding up. Both are outperforming the SPY. And both have good momentum.
Although, I would watch Granny as she has a bit of a sell mean reversion.
Big Brother Biotechnology and Prodigal Son Regional Banks are also both trading within last week’s range.
With SMH so decisive and everyone a bit indecisive but still in good shape, we now have price indicators to watch for.
Either IWM, XRT, KRE, IBB break out above last week’s range and continue to rally..OR
They fail the lows of last week’s range and take a trip closer to the underlying support near the 50-week moving averages (blue lines).
Sister SMH has done her thing.
I would assume, based on past performance, when the market rotates back to growth, that she will hang tough unless the rest of the Family falters.
We see everywhere else in the Family this week, so we also must watch that SMH does not begin to look like a double top from her.
To sum up:
- SMH is strong and decisive
- Rest of Family is indecisive but holding up
- Rotation back to growth favors SMH—unless others falter
- Need to watch if SMH risks forming a double top
Educational purposes only, not official trading advice.