Powell Struggling, Not Shrugging

June 21, 2020

Weekly Market Outlook

By Keith Schneider

US Equity Markets closed up on the week, led by the NASDAQ 100 which was up +3.5%. The news of a spike in the spread of the virus, triggered Apple to close stores in several states. That hit the tape late Friday and equity markets promptly sold off, closing on their daily lows.

The rally early in the week fizzled after the Fed announced that it will directly buy corporate debt (or any financial asset), regardless of its quality to levitate the market. This unprecedented desperate move cuts out the middleman, the ETF providers. Another theory (mine) is that Powell’s real agenda is to make all those new Robin Hood traders look smart.

This week’s highlights are:

• Risk Gauges remain in risk off mode
• The NASDAQ 100 closed at new all-time highs on a weekly basis
• The SPY and Dow Industrials all closed under their 10 DMA’s, but remained above their 50 DMA’s and still have an intact Island Reversal
• Volatility ($VIX) stabilized above its 200 DMA
• A sentiment indicator (% of stocks above the 200 DMA) is under 40% which is bearish
• Market Internals turned bearish short term and look better long term
• Gold closed at its highest levels since December 2012 and looks poised to run up
• Emerging Markets (EEM) continue to outperform Developed Markets (EFA) supporting inflationary pressures
• Biotech (IBB) busted out to new all-time highs

Stay Safe and Best Wishes for your trading

Keith Schneider

CEO - Marketgauge.com