General Hospital

Modern Family Checks In

Before you all lose your sense of humor over the market massacre, I found some irony that last Friday, Brookdale Senior Living (BKD) along with a couple of other healthcare stocks (Illumina) for one, substantially outperformed the S&P 500.

After all, if your hair looks grayer, you feel older, and you're basically fed up from trading, then communal dining followed by a relaxing game of Bingo might be just the ticket!

Looking at the weekly chart in the S&P 500 (SPY), since October 2011, every major correction (5% or more) ended with 2-3 days of huge volume (double or triple the average daily) and a sharp price reversal or what technical analysts call an inverted "V" bottom.

That happened in June 2012, then again in November 2012, June 2013, and most recently in October 2014.

During the 2012 corrections, the price fell beneath the 65 week moving average making the most conservative confirmation of those bottoms a return and close on a weekly basis back above that level.

Currently, the SPY 65 week moving average is at 203.75. It made a new 2015 low last Friday at 197.52, lower than the previous low posted in February 2015 at 197.86.

Remember our Modern Family?

Grandpa Russell 2000 (IWM) made its 2015 low in January at 114.20. Friday's low 114.37. Gramps should call the senior center and ask to borrow a walker to see if he can hobble back to around 118.00.

Granny Retail (XRT) initially came within inches of holding the February 2015 low at 91.04, but then proceeded to break it on Friday. Subsequently though, she closed ever so slightly above it at 91.06.

After her free fall, Granny Retail is calling the senior center to borrow an oxygen tank. With increased respiratory capacity, perhaps she will try for the 93.25 level again.

Big Bro Biotechnology (IBB), has free access to medication therefore sits relatively straighter, further away from the 65 week moving average breakdown. But has IBB overdosed? In the final moments, IBB failed and ended the week below the 200 DMA.

Prodigal Son Regional Banks (KRE) like his Big Bro, is not ready yet for senior living. Above the 65 Weekly Moving Average and sitting right on the 200 DMA, look here for best signs of that inverted "V" bottom potential.

That leaves Semiconductors (SMH) and Transportation (IYT). Both are comatose and have been placed on respirators with IV drips seeping into their veins.

Time has come for our annual end of August vacation. Last year, we were so happy to be leaving since the market had tanked with impressive volume. Once we were away however, SPY proceeded to rocket over 5%.

No doubt this correction comes with weaker overall breadth along with the violation of the 65 week moving average in the SPY. Most likely, any ensuing rallies should be thought of as opportunities to either short or liquidate any shorter-term long trades.

Nevertheless, with our Modern Family's weakened immune system, given the right meds, the Schneider Family vacation could once again be ill timed.

No worries. I leave you all in the very adept hands of Geoff Bysshe, President of MarketGauge and Jonathan Griffin, Assistant Director of Trading Education and Research.

Happy Trading! See you all again on September 8th.

S&P 500 (SPY) Nearly triple the average daily volume. At some point, cash will look for value and start to reinvest.

Russell 2000 (IWM) After the 2015 low, the December 2014 low is 113.00.

Dow (DIA) Remember those comments on not knowing how low the price would get in its bearish phase or for how long that phase would last? Remember comments that phases all eventually complete? Welcome witnesses.

Nasdaq (QQQ) The 2015 low 99.36.

Volatility Index (VIX) Party at VIX's house!

XLF (Financials) the 2015 low 22.89. 24.50 the 200 DMA

KRE (Regional Banks) 36.35 is the 2015 low. I'm banking this will not get there anytime soon

SMH (Semiconductors) 44.43 last October low. Oversold so would only sell rallies

IYT (Transportation) 144 now pivotal with oversold conditions, could see that before you might test the October 2014 lows

IBB (Biotechnology) 342.41 the 200 DMA and if opens and holds above, the new pain killers kicked in

XRT (Retail) If 91.00 holds on Monday, then perhaps this will work to Friday's highs at 93.50 again.

IYR (Real Estate) 74.21 the 50 DMA and pivotal

XHB (US HomeBuilders) Still in a bullish phase. I would most certainly look here if the rest of the market can hold up

GLD (Gold Trust) I remember fat finger day. The market dropped 1000 points and gold flew. Friday in comparison, not as much

SLV (Silver) Has to clear 14.92 and first the 50 DMA at 14.63

GDX (Gold Miners) I tweeted for folks to take profits between 15.90 and 16.00 last Thursday because of Friday's action so typical here. Now, 14.97 major support to hold

USO (US Oil Fund) One day-not yet-don't worry so much about missing that boat-it will be obvious

TAN (Guggenheim Solar Energy) If can recapture 30.05 I would consider taking a shot

TLT (iShares 20+ Year Treasuries) Flight to safety with the Fed Bullard saying rates might still have to be raised. Duh!

UUP (Dollar Bull) Nasty trip to under the 200 DMA.

EEM (Emerging Markets) Third day with stupendous volume. Here is an ETF the vultures are flying over to pick up scraps.

FXI (China Large Cap Fund) 35.00 is a reasonable consideration for a target if FXI closes out August beneath 38.80