June 15, 2020
By Mish Schneider
After the Fed announcement that they will be buying corporate bonds, the market took off.
Like mentioned in the weekend Daily, we must go back to the stick in the mud, or NASDAQ 100 and its island top.
Until the price trades up to 244.51 or the island gap low, today’s move is on the suspect list.
The Fed did what they promised.
According to an analyst at UBS, "We view this largely as the Fed following through on their promise to start ETF and individual bond secondary market purchase. A marginal positive for those that doubted the Fed would go ahead, but not much new. Definitely not a game changer."
Is that sustainable?
The Economic Modern family is always my vision of reason.
The Russell 2000 IWM remains below both the 50 and 200-week moving averages. The black line is a line in the sand pivotal point.
Granny Retail XRT sits on the 50-WMA but under the 200-WMA and is in a weekly bearish phase (as is IWM).
Biotechnology IBB held the 50-DMA and now has to hold 126. On the weekly we see the pivotal black line top o the channel. IBB is in a bullish phase.
Regional Banks KRE still looks weak. Bearish phase, under 40.00-a pivotal point. Good one to watch, as always.
Transportation IYT also sits in a weekly bearish phase. And sits on the pivotal black line.
Semiconductors remain inside last week’s trading range. In fact, it has 2 inside weeks as of today. That makes it pretty simple, Under 139.75 trouble, over 155 off she goes. And yes, SMH is in a bullish phase.
Bottom line-4 of the 6 members are in bearish weekly phases. The “inside” of the market are all in bearish phases.
The money is going into tech and pharma. Unless it goes into retail small caps and transportation, I cannot get overly comfortable long.
What I do see are yields low, dollar declining and gold holding.
For now, I’m positioning for safety first.
Russell 2000 (IWM) 142 resistance with support at 130 the 50-DMA
Dow (DIA) A move over 263.35 clears the 200-DMA
Nasdaq (QQQ) Island top-rare-will most likely confirm unless trades to 244.51. Support 220
KRE (Regional Banks) 41.45 resistance support at 36.15
SMH (Semiconductors) Inside week-so there’s that 139.78 last week’s low-150 resistance
IYT (Transportation) 158 support to hold or then see 150. 168 resistance
IBB (Biotechnology) Tested and held the 50-DMA. 126 key support 132 resistance
XRT (Retail) Landed right on the 200-DMA so 40.50 held and must keep holding
Volatility Index (VXX) 34.50 support
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