Market Blooms Among the Spikes

June 5, 2019

Mish's Daily

By Mish Schneider


blankPlanted outside our stucco wall, this cactus flower has not bloomed in 13 years.

The extraordinarily wet spring may have flooded food crops, but it has also helped the cacti flower.

Cacti do not need that much water to survive.

However, the extra amount of rain has meant the difference between surivival and thriving. (thrivival?)

With that in mind, we turn to the market.

With its very survival at stake, the market has gotten an extraordinary amount of rain.

The Central Banks and Federal Reserve, have suggested rate cuts will occur to keep the economy (I mean markets) blooming.

Thus far, those statements have sent the Dow up from Monday’s lows, by over 700 points.

Yet, in the face of slowing global economies and trade tariffs, can that rally thrive?

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Let’s take a midweek gander at the Economic Modern Family.

Since Semiconductors have been a huge focus, after Tuesday’s spectacular rally, today, it fell back below the 50-week moving average.

Hence, it has given up its leadership role for now.

Not that I would call them leaders, Biotechnology IBB and Regional Banks KRE, are both at least holding above their 200-WMAs (green) after failing them last week.

Could turn out to be significant either way-if they hold or not.

Transporation IYT, is now my focus.

With a bullish engulfing pattern midweek, IYT could make or break any uncertainty as to next direction.

Should IYT fail to close above 182.92, last week’s high by the end of this week, that bullish pattern negates.

Certainly, we cannot count on XRT, the only sector still below the 200-WMA, to show us any rain-induced blooms.

Therefore, can the Central Banks and the Federal Reserve keep a healthy balance between enough and too much rain?

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S&P 500 (SPY) Until it closes over 295 look out for weakness. Key support areas are 293.50 and 291.50

S&P 500 (SPY) Confirmed Caution phase-281.50 pivotal support, then 280. Above, 284.20 resistance

Russell 2000 (IWM) 148.40 now support with 151.65 last week’s high resistance

Dow (DIA) Unconfirmed caution phase with 254.31 the 200 DMA pivotal support. 257 good resistance

Nasdaq (QQQ) Confirmed Caution Phase with 174.25 super pivotal support and 177 resistance

KRE (Regional Banks) 51.40 support.  Overhead resistance at 53.50

SMH (Semiconductors) Confirmed Caution Phase making 101.01 pivotal for starters. Support at 97.61. Resistance overhead at 105

IYT (Transportation) 182.90 pivotal support. 185.75 resistance

IBB (Biotechnology) Flirting with the 200-WMA. That makes 103.15 area pivotal

XRT (Retail) 42.12 the major resistance with now, 40.00 big support

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