March 10, 2020
Mish's Daily
By Mish Schneider
To follow up on the Biotechnology IBB sector, it failed the low price from two weeks ago (109.70) until headlines (below) hit the tape.
Furthermore, four of the Modern Family members have broken a monthly moving average that has held since 2011.
Incidentally, Semiconductors and Biotechnology are both well above their 80-month MAs.
The market gained because of what? A proposed payroll tax cut?
Highly doubtful that that stimulates the economy.
I also read that it could cost $800 Billion or 100 times the cost of the money the government allocated to deal with the virus in the states.
Furthermore, with hints of the government bailing out the shale companies, cruise lines, airlines and rental car companies, I cannot help but wonder who really believes that will resolve the oil and health crises?
What about the impending mortgage and bank crises?
How else can we incentify corporations to buy back their own stocks?
After all, the Fed cut did nothing.
Yet as we know, it’s all about the stock market. Like Instagram, it’s image over substance.
Anyway, with the hope and greed factors in play, I am trying to remain less gloomy and more objective while looking at price.
After all, price always rules.
Where would I put my money?
The monthly chart breakdowns are disconcerting for sure.
Plus, the indices that trade below their weekly lows from 2-weeks ago will not impress technically, until we see a weekly (not daily) close back above those levels.
Levels, by the way, are all noted in the ETF part of the commentary.
But what has held and could complete the “flation” part of the stagflation scenario?
Soft and agricultural commodities.
Let’s take an example-the DBA Invesco Agricultural Fund.
The 2019 low was 14.62. The 2020 low from yesterday is 14.65. That could be an auspicious double bottom.
It also could be the start of what we are already seeing from the human “psyche,” like the hoarding of toilet paper:
The rising awareness that if food production and distribution begin to seriously falter, raw material prices will skyrocket.
Russell 2000 (IWM) 140.00 resistance with support 127.75
Dow (DIA) 247 pivotal resistance 236.00 the 200-WMA support
Nasdaq (QQQ) 199.37 the 200-DMA pivotal 185 underlying support
KRE (Regional Banks) Inside day. 35 support. 44 overhead resistance
SMH (Semiconductors) 125.34 pivotal.
IYT (Transportation) 155.24 the resistance or 2018 low. 144.50 then 139 support
IBB (Biotechnology) 109.70 pivotal. 113 resistance to clear
XRT (Retail) 39.16 resistance 36.00-36.90 support
Volatility Index (VXX) 43 resistance 35 pivotal
Junk Bonds (JNK) 104.78 overhead gap to fill
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