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Economic Modern Family — Home for the Holidays, Part 2

Over the weekend, I covered small caps, retail, semiconductors and transportation. The conclusion was that “If you put these four charts all together, we get a reunion that is filled with the makings of a family breakdown. While Granny XRT and Sister Semiconductors SMH give us investors reasons to feel good about gorging ourselves, the rest of the Family (IWM & IYT) remind us not to eat what we cannot digest.”

Today, we cover 2 other sectors of the Economic Modern Family.

KRE, or Regional Banks, rallied right into resistance. It is performing on par with the SPY. Momentum shows a bullish divergence, but with the possibility of a mean reversion. Most importantly, KRE has recovered from the March lows, but has not really gone anywhere compared to other sectors and stocks that have made new all-time highs.

Talk about a family breakdown. KRE scared investors a few months ago. Now, however, there’s some talk about commercial real estate and bank defaults going forward. And most believe that the FED will add the necessary liquidity. Alternatively, if we do have a recession, easing monetary policy will help the banking sector. We believe perhaps a sea change — this banking as we have always known it is changing to the crypto landscape.

Regardless, KRE must clear the 200-DMA and July 6-month calendar range to continue its ascent. A break under 40.00 would be a warning sign.

Over the weekend, we said that IYT remains in a downtrend, under the July 6-month calendar range low. Momentum is in a bearish divergence to price, as it has yet to clear its 200-DMA while price has. Is IYT more inclined to lead or follow from here? That is a big question and one that we should watch for the answer to so we can assess if this rally is sustainable.

Sister Semiconductors SMH, in a bullish phase, shows momentum in a bearish divergence. Nonetheless, Biotechnology IBB has been the worst sector of the Family. IBB remains in a bearish phase, well under the July 6-month calendar range low, and it is underperforming the SPY.

One bright spot though, is that the Real Motion indicator, or momentum, shows a move over the 50-DMA or a bullish divergence. Two closes in price over the 50-DMA and it is possible IBB runs back up to resistance around 124. IBB is ripe with picks, some of which I have covered in the media in the last 2 weeks. Others I will discuss this week in the media.

This is for educational purposes only. Trading comes with risk.

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Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

Mish and Maggie Lake cover inflation, technology, commodities and stock picks in this interview with Real Vision.

Mish talks trading range, fundamentals, and how to think about commodities right now on Yahoo! Finance.

In this appearance on BNN Bloomberg, Mish covers the emotional state of oil and gold, plus talks why small caps are the key right now. She also presents a couple of picks!

Learn how to trade commodities better with Mish in this interview with CNBC Asia!

Mish and Charles Payne discuss why the small caps, now in mid range still have a chance to rally in this appearance on Fox Business’ Making Money with Charles Payne.

Mish talks about Tencent Music Entertainment on Business First AM.

Mish talks bonds with Charles Payne in this clip from October 27, recorded live in-studio at Fox Business.

Coming Up:

November 28: Your Daily Five, StockCharts TV

November 29: Crypto Town Hall & Schwab Network

November 30: Live Coaching

December 3-December 13: Money Show Webinar-at-Sea

Weekly: Business First AM, CMC Markets

ETF Summary

S&P 500 (SPY): 450 support, 465 resistance.Russell 2000 (IWM): 181 resistance, 174 support.Dow (DIA): 360 resistance 346 support.Nasdaq (QQQ): 388 now pivotal support.Regional Banks (KRE): 45 big resistance.Semiconductors (SMH): 160-161 pivotal support.Transportation (IYT): 235 support.Biotechnology (IBB): 120 pivotal.Retail (XRT): 65 resistance, 60 pivotal support.

Mish Schneider

Director of Trading Research and Education

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