March 15, 2017
By Mish Schneider
We placed a block of ice into the sink the other night and magically, Alfred Hitchcock presented himself.
The famed director began every episode of Alfred Hitchcock Presents by laying the groundwork for the evening’s story of suspense and terror.
In Season 7, on May 1, 1962 the episode called What Frightented you, Fred? aired. It’s the story of a prisoner that once released, prefers to return and remain in prison.
The suspense and terror that preceded the Federal Reserve’s already expected decision to raise the rates by ¼% was presented to traders today by Janet Yellen.
The Committee expects that gradual adjustments to monetary policy will help economic activity expand at a moderate pace. They believe that the labor market conditions will strengthen further.
Most interesting to me is the confidence that inflation will stabilize around 2 percent over the medium term.
Only one member of the committee voted against the raise-Neel Kashkari.
Yesterday, I published a piece on New Mexico and three reasons why that state has seen rising not falling unemployment rates.
A review: low prices in oil and gas, fear of the new health-care plan, a refusal to allow the state to profit in hemp plant products, products we import mainly from China. A benign way of saying, a refusal to invest in the future.
If Kashkari is the Fred in the Fed, perhaps issues like those in NM weigh heavily on his wanting to stay in the prison of dovish monetary policy.
We wonder, what frightened you, Neel?
Kashkari, in a highly unusual move by Fed folks to blog their thoughts, did so today. "The bottom line is the job market has improved substantially, and we are approaching maximum employment," he wrote. "But we aren't sure if we have yet reached it. We may not have.”
He added he is "very concerned" about financial stability. He also remarked on the Fed's trouble with foreseeing the future.
Let’s take out our crystal ball.
Today, Oil, Gold, the Euro, Emerging Markets and most Equities flew.
The 20+ Year Treasury Bonds (TLT) rose. Granddad Russell 2000 returned over the 50 daily moving average and back into an unconfirmed bullish phase. Biotech and Semiconductors gained.
Transportation had a green day but could not shake off its warning phase. And Granny Retail begrudgingly moved higher. Begrudgingly because the volume was half of the average daily.
Regional Banks fell, clearly disappointed in today’s Fed announcement as not aggressive enough.
That puts the scorecard as Retail bearish, Trans warning, the Russell’s in need of a bullish confirm, Biotechnology hopeful, Banks less so and Semi’s euphoric.
Yellen did say that it is “too early” to gauge Trump’s proposed fiscal policies. The rate rise today reflected only current information not a “preemptive response” to the future.
“And now…a word from our..SPON-surrrr.”
S&P 500 (SPY) 237.70 now pivotal number. 240 the price to beat
Russell 2000 (IWM) 136.90 the 50 DMA to close back over again. Needs more oomph to catch up if good
Dow (DIA) 209.35 pivotal
Nasdaq (QQQ) And yet another new all-time high in the world of tech exuberance
KRE (Regional Banks) Regional Banks too big to fail? This might under 56.40 the 50 DMA
SMH (Semiconductors) New highs wonder woman
IYT (Transportation) 167.35 the 50 DMA must clear to get this back in the game-and for confidence in the economy
IBB (Biotechnology) 300 pivotal-where the specs live
XRT (Retail) Cleared 42-now must remain above
IYR (Real Estate) Big move off of that support at 76. Now, 79 in focus
GLD (Gold Trust) 114 held to the tick! Now 115.50 is the closest support if good
SLV (Silver) 16.50 the resistance
GDX (Gold Miners) 23.25 resistance and 22 pivotal support
USO (US Oil Fund) Confirmed the reversal with good volume. See move to 11 if holds 10.00
OIH (Oil Service Holders) Textbook reversal pattern volume and all.
TAN (Solar Energy) Back into an unconfirmed recovery phase. 17.78 max risk
TLT (iShares 20+ Year Treasuries) 118 pivotal
UUP (Dollar Bull) Have been bearish and said so here-now, 26.10-15 resistance, 25.80 support
Every day you'll be prepared to trade with: