April 16, 2020
By Mish Schneider
We have been here before.
Sister Semiconductors SMH rocks the house, while her sibs and Grandparents lag.
Today, the disparity was palpable.
SMH closed up 2.71%.
The Russell 2000 IWM closed down .86%.
Regional Banks KRE closed down 3.68%.
Granny Retail fell by .51%.
In the last several years, corporate buybacks in the NASDAQ, tech and S&P 500 stocks along with low interest rates and low taxes explain the differences.
Today, we can thank the Fed and insider buying.
The real US economy or the “inside” of the market, reflect the issues even long before the virus.
The trade war didn’t help.
So now, with all indices in the green except for IWM, who is right?
If we look back at the beginning of 2020, we can see how events played out.
On February 19th, NASDAQ QQQ peaked at 237.47 or new all-time highs.
SPY was also at new all time highs at 339.08.
IWM was at 169.18 while ATHs were made in 2018 at 173.39.
Regional Banks KRE were even further from their ATHs as was Retail and Transportation.
After that peak high in February, the virus hit.
So, that makes us wonder had it not, would the economy have grown to include the weaker sectors?
Or, was it inevitable that the virus or some other cataclysmic event would turn out the great equalizer?
Here we are again.
FED and government stimulus, especially with debt buying, has encouraged the bulls for a repeat performance in QQQ, SPY and SMH.
If KRE, IWM, XRT and IYT cannot join the fantasy island party, then once again, bulls, do not get too relaxed.
Russell 2000 (IWM) 114.55 support 118-120 pivotal. 125.80 2018 November low resistance
Dow (DIA) 237 the pivotal 200-week moving average. 240 resistance. 227 support
Nasdaq (QQQ) 205 support. 220 big resistance
KRE (Regional Banks) Needs to get back over 33.10 to get interesting
SMH (Semiconductors) Unconfirmed Bullish phase 128 support to hold
IYT (Transportation) Really needs to clear 150 to get interesting
IBB (Biotechnology) 115 support with 120 next resistance
XRT (Retail) 31.00 support 36-38 big resistance
Volatility Index (VXX) 39.50 support. Has to close above 42.20 to get interesting
Junk Bonds (JNK) 100.85 the 50-DMA. 97 support
LQD (iShs iBoxx High yield Bonds) 129.10-132 range to watch break. 135 resistance
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