July 23, 2019
By Mish Schneider
Although I am stepping back to 3x a week for the Daily, I thought it would be useful to see the Q and A I did today on the radio.
Furthermore, I share a link at the end from my interview early today with Dale Pinkert-you get to see my screen while I talk.
Q-You wrote, never short a dull market-what does that mean for active traders and those of us invested in the stock market?
A- A dull market consists of low trading volumes and tight daily trading ranges. There is very little change and action during a dull market. Some believe that the market is storing energy during dull markets and that the market is preparing for a rally. We have evidence to support that-but also to support a sell off- The complacency that goes hand in hand with a dull market could get investors into serious trouble, if they don't understand where the market is in relation to its longer-term trends.
Q- Where are you seeing the complacency?
A-There is an instrument called VIX or the volatility index. It measures fear.
The last time VIX was priced this low was in 2002-2007. Currently, VIX is the perfect measure of that complacency.
Q- What about the metals-gold and silver-do they measure fear?
A-Gold particularly does. Silver has a dual purpose. However, they also are inflation trackers. Silver has caught up a bit to gold and today, sugar which was near its historical low, reversed and flew higher. That could mean, the market is starting to sense that the increased spending, some wage increases and the prospect of a rate cut, could spark inflation. Remember, commodities are still languishing as a 100-year low ratio to equities.
Q- What are you looking for to make the Dow go to 30k or 25K?
A-simple-the small caps have to catch up-transportation has to hold up and retail (brick and mortar) has to hold tough. All still under-performing. If they move, the Dow will fly. if they fail, could see a very quick drop.
Q-Quick update on MJ-the pot ETF?
A-Fell to exactly where it needed to hold. 29.01-now, we know that is a perfect place to sell if breaks-and if can get back up over 30 again, another opportunity to buy.
Russell 2000 (IWM) 154.30 is the major pivotal 50-WMA with resistance at 155.35. Underlying support at 152.80 the 50-DMA
Dow (DIA) 273.99 all-time high. 272 pivotal support
Nasdaq (QQQ) 192.74 pivotal area. Resistance 194
KRE (Regional Banks) 53.40 pivotal at the 200 DMA. 52.70 key area to hold.
SMH (Semiconductors) 120.71 last swing high. 115.50 big underlying support
IYT (Transportation) 190 underlying support with 192.40 pivotal and resistance at 195 area.
IBB (Biotechnology) 105.20 the 50-DMA pivotal.
XRT (Retail) 42.10 50-DMA support. If can clear back over 42.80 better.
Every day you'll be prepared to trade with: