Levels Only and a Repeat of the 5 Factors to Watch

August 1, 2019

Mish's Daily

By Mish Schneider

  1. The (central) banks want to see higher inflation.
  2. Stock buybacks by corporations are out of control. The S&P 500 companies for example, are on track to buy back another $940 billion of stock in 2019. That means that companies are now returning more cash to shareholders than they are generating in free cash flow. This is exactly why we saw a vacuum of no bids on the way down yesterday (and today.)
  3. In times of economic turmoil, the mentality can switch from too much raw material supply (deflation) to one of hoarding the raw material supply (inflation).
  4. Although gold and silver sold off yesterday, the recent action proves that there is an investor appetite for metals. It will be interesting if buyers come back in now that both metals are holding support. THEY SURE DID!
  5. Should the dollar begin to falter, I would take that as a sign that many of the undervalued commodities will begin to look attractive.

One day ago-Bottom line is that August has had some historically huge selloffs. And since the market’s solvency has been mainly due to dovish monetary policy and corporate buybacks, this might be a really good time to check your stock holdings, trim the fat, reduce exposure, and go enjoy some down time.

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S&P 500 (SPY) 299.30 resistance with support 292.30 where the 50 DMA sits.

Russell 2000 (IWM) 155.74 now resistance with support at 153.25

Dow (DIA) 264.70 next support or the 50-DMA

Nasdaq (QQQ) 186.50 the 50 DMA support with resistance at 193.05

KRE (Regional Banks) Broke 54.62 the key support for this week-unconfirmed bearish phase.

SMH (Semiconductors) Resistance at 119. Support at 109.30

IYT (Transportation) Nasty reversal, back under the 50-WMA at 188 now super pivotal.

IBB (Biotechnology) 105.56 the 50-DMA pivotal.

XRT (Retail) Unconfirmed bearish phase-42.10 resistance with 40.00 support

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