October 27, 2019
By Mish Schneider
She gets the award for Best Actress in the Economic Modern Family.
Above her is Granny Retail XRT, a relic, but a collectable one.
Granddad Russell 2000 IWM, is the table or foundation for the Family.
Having stood firm in its recent gains, IWM supports the three eggs-Transportation IYT, Regional Banks KRE and Biotechnology IBB.
Together, this still life tells the story of why the market held onto recent gains and gained some more despite the barbs shot at it with the Amazon earnings, ballooning deficits, defaulting car loans, no Brexit vote, impeachment talks, etc. and etc.
Following up on the silver to gold ratio, that ratio widened further.
Some analysts believe that silver went nearly 5 times gold’s value on Friday because of increasing industrial demand.
If true, then for now, a good sign all around for equities and commodities.
Yet, it still supports the inflation theory I have been proposing, especially considering the rise in many other commodity prices this week.
For now though, let’s relish in our still life, the artistically juxtaposed economic Modern Family.
I’ve zoomed in on the price action of the weekly charts.
Two of the Family, The Prodigal Son Regional Banks KRE and Granny Retail XRT, closed above key weekly moving averages.
KRE, although not his first rodeo above the 50 and 200-WMAs, has more work to do.
If you look at the first peak high in mid-March, since then, every peak high has been lower than the one prior. A weekly close above 55.00 breaks that pattern.
Similarly, Granddad Russell 2000 also has lower highs. A move above 158.25 breaks that pattern for Gramps.
Transportation IYT has stopped dead in its tracks at 195 five times since July. There’s the number to watch this coming week.
Big Brother Biotechnology IBB, another one with lower highs, has yet to clear its 50-WMA. IBB is the sector that helps us see investor sentiment.
Perhaps the most significant member of our still life is Granny Retail XRT. Not since the crash in late 2018 has she been above the 50-WMA.
Seasonality is one reason for her stronger performance. With lots of earnings yet to report in the retail space, should XRT stay above the MAs, we could make a case for triple bottoms around 38.00 going back to 2017.
Strong retail earnings could take her lapping around the mall until she reaches the highs around 52.00.
And that leaves our Sister Semiconductors. She made another new all-time high.
If she keeps this up, she will earn a lifetime achievement award.
Our artistically juxtaposed economic Modern Family looks museum worthy.
However, keep watching the stuff economists have nightmares over.
One curator moved those art pieces together. If the aesthetics change, so will the pieces in the still life.
Russell 2000 (IWM) 153.50 pivotal support. 156 resistance
Dow (DIA) 270 pivotal resistance. 265.50 support
Nasdaq (QQQ) New all-time highs at 195.74. 193 support to hold
KRE (Regional Banks) 53.00 support 55.00 resistance
SMH (Semiconductors) 125 nearest support. 127.14 the ATH
IYT (Transportation) 190 support 195 pivotal
IBB (Biotechnology) 105 pivotal 108 resistance
XRT (Retail) 44 cleared-now must hold
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