The Elders Both Fatigue: Grandpa Russell 2000 v. Granny Retail
Above is an AI image to illustrate that while, on Monday, Granddad Russell (IWM) was offering a helping hand to his wife Granny Retail (XRT), today they both looked more vulnerable.
Just as the S&P 500 failed to clear its 23-month moving average, we are hoping that IWM not only holds its 80-month MA (green on the monthly chart), but also holds its 50-DMA (blue on the daily chart).
Real Motion, our proprietary indicator that lets you see hidden strength or weakness during market trends, shows momentum still above its 50 and 200-DMAs. It also remains, despite the price drop, in a bullish diversion, meaning momentum is okay.
Yet, with today’s selloff, and considering we might have hit the top of this year’s trading range in SPY, Granny remains a concern.
Granny XRT fell in price closer to the March low. Momentum though is now going sideways sitting on the Bollinger band, perhaps getting ready for a mean reversion. That would be a better sign for everyone if XRT holds here and turns higher.
These two key Family members in the Economic Modern Family are not only telling a story–they are the story. And that story reflects a thin veil of optimism, but with enough doubt that, unless both move higher from here, the market could return to risk-off. That is, until SPY tests the lower regions of its persistent trading range.
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- S&P 500 (SPY): 23-month MA 420; support 415.
- Russell 2000 (IWM): 170 support, 180 resistance.
- Dow (DIA): 336 the 23-month MA.
- Nasdaq (QQQ): 336 cleared or the 23-month MA; now it’s all about staying above.
- Regional Banks (KRE): 42 now pivotal resistance, 37 support.
- Semiconductors (SMH): 23-month MA at 124 now more in the rear-view mirror.
- Transportation (IYT): 202-240 biggest range to watch.
- Biotechnology (IBB): 121-135 range to watch from monthly charts.
- Retail (XRT): This could be the new harbinger like KRE was in March. Poor Granny.
Director of Trading Research and Education