June 20, 2019
By Mish Schneider
According to some top forecasters, the year of the pig is in the water element, which should wreak havoc in many areas.
One area we have seen havoc in is with the weather.
Floods have considerably slowed the corn, soybean and wheat growing season.
Another area that forecasters predicted would suffer from the water element is the overall stock market.
The prediction is for five years of a bear market before fire returns in 2023.
Nevertheless, today the S&P 500 made a new all-time high.
Hammy the Pig has a new friend, a white rabbit.
Did Hammy do a magic trick and pull the rabbit out of a hat?
Before we go there, an update on the silver to gold ratio.
With gold and silver both exploding to the upside today, the ratio actually turned down. That means that silver is still underperforming gold.
In inflation terms, that means that both metals rose in anticipation of a more future dovish stance by the Fed, but also because of the Iranian drone situation.
What could this all mean?
If the ratio flips in favor of silver, I’d take that as more of an inflationary sign.
And how does the “inside” of the market look?
Look at the blue (50-week moving average) and green (200-WMA) lines on all charts.
Even with the S&P 500 or SPY all happy, the Modern Family continues to underwhelm.
Biotechnology IBB ran right up to the blue line. As did the Russell 2000 IWM and Transportation IYT. But, they have yet to clear it. Watch for that.
Semiconductors SMH is above the blue line, but could not clear the 50 daily moving average.
Regional Banks KRE tested the green line before attempting to hold it and bounce.
And Retail XRT, is not even close to its green line.
Unless IWM and IYT take the lead soon, Hammy the Pig’s rabbit could disappear just as easily as it magically appeared!
Lastly, keep close eyes on commodities. Not only the gold to silver ratio I speak of, but also look at oil, grains, and softs.
Should IWM and IYT go red tomorrow, with the weak dollar and the yields falling, that historically low equities to commodities ratio could very well be the best play for the second half of 2019.
Note-there will no weekend daily as I am heading for surgery tomorrow morning.
See you all very soon.
S&P 500 (SPY) 294.95 the old all-time high is now the pivotal area to close above tomorrow
Russell 2000 (IWM) 155.35 is the place this must close above for the week
Dow (DIA) 269.28 all-time high with 265 support
Nasdaq (QQQ) 191.32 all-time high. 187 support
KRE (Regional Banks) 51.40 support. Overhead resistance at 53.50
SMH (Semiconductors) 107 now pivotal support. 108.75 the 50-DMA resistance
IYT (Transportation) Still not drinking the Kool-Aid. Must clear 190 to look good. 187 pivotal. 185.50 support to hold
IBB (Biotechnology) Stopped right at resistance at 109.80
XRT (Retail) 42.45 pivotal, and 41.00 support
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