Stock Trading Outlook for the Week Ahead (with Economic Modern Family)

Labor Day is approaching, so it’s time to have fun, have fun for all and relax. Monday the market is closed in observance of Labor Day.

I made two videos a week with written commentary to introduce you to the Single Index and the Six Sectors of the Modern Family.

This includes the ancestor of the US economy, the Russell 2000.

The family, by design, is US-centric and has been an invaluable resource for telling the story of the economy and the stock market. A link to who the members are and why each is on our website.

This weekend we take a look at the weekly charts to take a step back.

We start with the Russell 2000 and its wife, Grandma Retail XRT. Both represent demand and supply, focusing on aggregate consumption and small business activity.

Note how each broke through their June lows, retraced to their 200-week moving averages, and then rallied very close to their 50-week moving averages.

We call this a trading range and as such this is the strategy we employed. Currently, buying weakness and selling strength at turning points generate profits.

IWM and XRT have sold hard since Jackson Hole. They are both approaching their 200-WMAs now.

It makes the story clear. If they hold, here we go. If they fail those critical green lines, expect another leg down.

Only 5% of Americans have adjusted their portfolios in 2022 in their 401(k)s and 403(b)s.

Our biggest concern is at what point does the pain become too much to handle and we see a massive sell-off?

Well, we prefer to be prepared and have a plan. Nevertheless, there are pockets of the market and within the family that are doing better than others.

Let’s take a look at these charts as well.

transportation sector etf iyt reversal trading prices down september chart bearish

The next two charts are transport (Trans IYT) and regional banks (our prodigal son KRE).

We have grouped them together as they have sold off but are holding well above their 200-WMA given each relative strength.

This tells us that, although weaker, the demand for delivery, travel and banking services gives us a glimmer of hope that things are not as bad as people think.

Moreover, it supports our theory of stagflation, where the economy stagnates but does not necessarily collapse.

At least not yet.

Moreover, it supports our theory of stagflation, where the economy stagnates but does not necessarily collapse. At least not yet.

semiconductor etf smh downside trading price reversal

The last two members are more speculative in nature.

Sister Semiconductors (SMH), although in better shape than Granny and Gramps, based on a daily chart, should hold 200.

If that level breaks, then we’re looking at that 200-WMA at 186-187.

Big Brother Biotechnology (IBB) is technically the weakest of all the family members. Already priced below 50 and 200-WMA, we see 118, or the early 2022 lows as the first level to hold. If this breaks, 110 could be the next support stop.

If you put it all together, there is no doubt that this market could have more problems. However, never overlook these weekly support levels.

Be open-minded, keep the noise in your head, and follow the price.

Family and the stock market are forward thinking. We never really know what awaits us. Therefore, keep the economic family in your toolbox and let it and the charts help you navigate your next trades.

To learn more about how to invest in the profitable sectors of the modern family, contact by chat, phone, email or make an appointment with Rob Quinn, our chief strategy consultant, in click here.

Mish’s Upcoming Seminars

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Analysis and summary of ETF trading:

S&P 500 (SPY) Support 390 maintained – level 400 failed

Russell 2000 (IWM) Must erase 184.25 hold 177

Dow Jones Industrials (DIA) Closed low under support. 312 key

Nasdaq (QQQ) Either goes back above 296 or more pain at 280

KRE (Regional banks) Unconfirmed bearish phase with close below the 50-DMA

SMH (Semiconductors) 215 resistance and 205 support

IYT (Transportation) Unconfirmed bearish phase with close below 50-DMA-if fails more on Tuesday, pain

IBB (Biotechnology)125 resistance 117 support

XRT (retail) 64.50 resistance and 62.00 6-month calendar range high support – which contained – at least a sign of hope

Twitter: @marketminute

The author may have a position in the titles mentioned at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.