Small Caps Eye Rebound as Semiconductors Flash Bearish Signals
2024.07.25 07:32
To repeat on the importance of the July (and January 6-month calendar ranges)
The Six-Month Calendar Ranges
- Provides directional bias for the next 6 to 12 months.
- January and July divide the year
- Simple levels that matter + the right indicators and tactics.
Overall, we look at 2 simple things.
- If an instrument breaks out of the range or breaks below with momentum and price and then has follow-through.
- If an instrument breaks out or down and then reverses back into the calendar range high and low.
Looking at or the small caps, any question on whether this is the new kid in town, is answered.
Holding above the July range (green horizontal line) is a positive.
Of course, should the market fall further that could change.
Nonetheless, if the market firms are from here, IWM is a good place to go for more upside.
On the flip side, and completely different from what we have seen for the last 2 years, our Sister Semiconductors is having a hard time.
SMH not only failed to clear the July range high, but it also broke the low last week.
Now, SMH is in an unconfirmed warning phase, trading under the 50-day moving average.
The momentum or Real Motion indicator is pointing to oversold.
Hence, we could see a bounce tomorrow perhaps back up towards the 50-DMA.
But unless we see a real reversal with the price back through the calendar range lows, we can assume that the trend is real.
Money continues to rotate into small caps and out of Mega caps.
ETF Summary
- S&P 500 (SPY) 540 support
- Russell 2000 (IWM) 217 support 227 resistance
- Dow (DIA) 400 pivotal
- Nasdaq (QQQ) Broke under the 50-DMA but some weekly support 463
- Regional banks (KRE) 54 now support with 60 next level to watch
- Semiconductors (SMH) Failed the 50-DMA
- Transportation (IYT) 64.10 support
- Biotechnology (IBB) 146 now pivotal
- Retail (XRT) 75 pivotal
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) 78.00 support
