The FOMC Forced Streak

February 22, 2017

Mish's Daily

By Mish Schneider

mdaily20170223In the wild, tigers do not generally stay in groups. Yet, because of man, tigers are sometimes forced into unnatural social groups. These groups are called “streaks.”

Tigers are not necessarily aggressive to one another. In the wild when two tigers meet, they may stop to rub heads and do the sort of “air-kissing” your housecat does.

But then they go their separate ways.

Generally, tiger “streaks” occur in captivity because of restrictions in space and money.

If tigers tend to stay solitary except when forced together because of space and money, does that describe the latest Federal Reserve comments?

“Many” Fed officials want to raise rates “fairly soon.” But, they have yet to raise those rates because of considerable uncertainty concerning the new administration’s fiscal policies.

The Fed, with and without a vote on policy, see increasing economic upside, provided Trump’s fiscal policy turns out to be expansionary.

The Fed expressed only modest inflationary pressures. However, they expressed confinement on policy should those pressure rise significantly.

Some officials see downside economic risks should the US dollar gain in strength.

Sure sounds like a forced unnatural social group of tigers to me.

Inflation-maybe? Expansionary fiscal policies? Maybe. Negative economic impact from a rising dollar? Maybe.

What did the market do?

The La La Land DJIA rose. The rates fell. The dollar fell. Most commodities besides gold and silver fell.

The Russell 2000 retreated from the top of the monthly channel line or 140.00-140.50. IWM fell .40%.

Transportation fell. In fact, IYT reflects skepticism regarding economic expansion unless it picks itself up from here.

Retail fell. GDP skepticism for sure. The big banks closed green. Why am I not comforted by that right now?

The biggest threat to tigers is extinction from poaching, retaliatory killings and habitat loss. The biggest threat to the Fed? I’m guessing the same.

S&P 500 (SPY) Inside day which is probably a good thing. 240 still in focus with 233.50 support

Russell 2000 (IWM) 139 is the pivotal number to watch end of month

Dow (DIA) New highs

Nasdaq (QQQ) New highs but closed just shy of them. 128.70 support

KRE (Regional Banks) 57.00 support to hold

SMH (Semiconductors) Inside day near the highs. Under 76.50 would be trouble

IYT (Transportation) Held the fast-moving average. But now must clear 171.15 or could set off a chain reaction.

IBB (Biotechnology) 285-287 pivotal support.

XRT (Retail) Back to watching 43.75. Macy’s downgraded today to BBB-

IYR (Real Estate) Confirmed accumulation phase-79.00 now must hold level

GLD (Gold Trust) 116.05 max risk. 117.50 pivotal. Over 118 can see 120

SLV (Silver) Inside day. Over the 50 DMA-still in play

USO (US Oil Fund) Amazingly sideways.

TAN (Solar Energy) Solars sold off hard but that could be a buy opportunity

TLT (iShares 20+ Year Treasuries) 118 lower support with 120 pivotal

UUP (Dollar Bull) 25.80 support 26.25 resistance

FXI (China) 38.35 a good risk point now

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