June 17, 2020
By Mish Schneider
“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.
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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