The Elephant in the Market

June 17, 2020

Mish's Daily

By Mish Schneider

blank“I don’t see us wanting to run through the bond market like an elephant snuffing out price signals, things like that.” Powell

Powell is referring to the Fed’s plan to expand its purchase of bonds beyond ETFs, and into individual issues.

The implication is that the Fed plans to buy corporate bonds, but allow the market to dictate the pace of when and how much.

Therefore, that statement has become the elephant in the market.

Raul (our pup) is there just because he’s cute. Heck, something needs to look cute after staring at the screens all day!

On the market itself, QQQs may have filled the island gap, but it still has a reversal top from the high at 247.82.

Hence, we are not surprised to see the pressure come into the other indices and sectors, especially given the underwhelming Economic Modern Family performance I have written about this week.

So speaking of elephants in the market, The Russell 2000 IWM weakened even further below both the 50 and 200-week moving averages.

However, it could trade down to 135 and still wind up ok.

Regional Banks KRE looks weaker as well. A move back under 40.00 not so good. Today, that level held as support.

Here we are. Who wins? Raul the cutie pie, or the immovable stone elephant?

For good info on strategy and the macro, here is this morning’s segment of Benzinga (34 min 5 sec in)

And from Tuesday on Wall Street Today, China with Jackie Pang.

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S&P 500 (SPY) Inside day. 312.50 pivotal. 320 big resistance 302 support

Russell 2000 (IWM) Inside day. 147.20 resistance with support at 141

Dow (DIA) Inside day and hovering on the 200-DMA

Nasdaq (QQQ) No more island top 240-247.82 range

KRE (Regional Banks) 41,45 resistance 40.00 support

SMH (Semiconductors) Inside week- 139.78 last week’s low-155 resistance

IYT (Transportation) Inside day 158 support 168 resistance

IBB (Biotechnology) 131 support 134 resistance

XRT (Retail) 200-DMA 40.50 support to hold 43.50 resistance

Volatility Index (VXX) 34.50 support-through 38.50 better

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