In Shakespeare’s Much Ado About Nothing, Benedick begins as a man who vehemently claims he shall never marry only to become one who single-mindedly intends on marrying Beatrice.
When Beatrice asks him to murder Claudio, he protests, but ultimately engages Claudio in confrontation for the sake of his love.
This morning, when Facebook (FB), Amazon (AMZN), and Nasdaq opened to new highs, many bears who claimed they’d never buy, bought today.
Then the market asked the bears to prove their love and stick around, even if the market got murdered.
The flask in Benedick’s hand holds the “medicine” the bears needed to feel drunk enough to throw in the towel. And just like drunken bears, perhaps they bought a tad too late.
Yesterday, in my ongoing series live on Facebook, I featured Transportation (IYT).
As folks were buying, Trans told us to tighten stops. IYT opened lower and continued to slide all day.
Without a strong transportation sector, rallies tend to be short-lived.
As much as almost everybody has loved this market, has this rally really only been much ado about nothing?
That question might seem a bit harsh. However, warning signs popped up (not the least of which is that once IYT slid, so did the Russell 2000).
And Semiconductors, Biotechnology, and Regional Banks.
The hold out? Ironically, Granny Retail (XRT).
On the heels of Nordstrom’s (JWN) and Michael Kors’ (KORS) rallying, XRT gained 1.4%.
That puts Granny in a weak Recovery phase, which could gain momentum should XRT hold 41.00. I figure a run to 43 is not out of the question.
The concern I have is that both IYT and IWM cleared the tops of their monthly chart channels only to fail them today.
Furthermore, the buyers who have appeared on every dip seemed conspicuously absent today.
172.50 and 142.90 respectively (IYT, IWM) are the key areas to close above by the end of day July 31st.
If not, then both signal channel failures on longer-term timeframes.
