The Itsy Bitsy Biotech Climbed Up the Water Spout

June 6, 2016

Mish's Daily

By Mish Schneider

mdaily20160607

Meow Wolf Santa Fe, NM

On April 27^th I wrote commentary about a film I hadn’t thought about in a hundred years called “The Hellstrom Chronicle.”

I reiterate that now because many sorts of insects are indeed growing in population-And I’m not necessarily excluding the human kind either.

The above photo-all part of the Meow Wolf Exhibit-with the giant spider looming over Santa Fe, NM at sunset, reminds me once again that the market has yet to react to the continually rising prices of many commodities. By react I mean the misguided attention to economic data as the basis for the Fed raising or not raising rates.

Creeping inflation, which can easily go from crawling to flying, is what the FED is most likely focusing on.

Since attention on viruses like the Zika, or the swarm of Africanized bees that killed the poor hiker in Arizona recently has barely been on the market radar, I find myself a bit obsessed for 2 reasons.

However, as I have learned as a trader, when elements that could escalate beyond human control begin to occupy my mind, it’s time to think about the type of investments that might translate to money. Hey, it’s what I do!

What are the reasons for my obsession and how has that impacted my trading?

I mentioned I have 2 reasons for my obsession. Besides my trying to make money, I worry. I worry about natural disasters such as tornadoes, floods, drought. I worry about spreading illnesses. I worry about Bees-I worry about them a lot. I am allergic to their stings.

Yet, I’ve been well-trained to think about money opportunities at the same time. While I’m screaming for my epipen, I am also wondering which pharma company makes it.

Commodities-corn, soybeans, sugar, wheat, silver, gold all have well outperformed the market. The dollar is weaker, the rates remain low. That fuels commodities even further.

Insects-I’ve heard mention of genetically engineering a mosquito that eats the Zika virus mosquito. I imagine some biotech companies are working on vaccines. I know genetically modified food is a thing-but far from replacing the kind grown in the ground.

Point is, while a lagging member of my Modern Family, this year, I now find Big Bro’ Biotech (IBB) more compelling.

The Fed will have to raise rates if commodities continue on its path. Especially if oil runs up beyond what has been a relatively subdued rally thus far.

Furthermore, commodities have arrived. Just ask the Bloomberg reporters who, considering I’ve been writing about this since October 2015, have now put the official “commodities are bullish” stamp of approval on them.

“I haven’t’ seen a spider around the house in days. WHAT THE F*&K ARE THEY PLANNING?” Robin Williams

S&P 500 (SPY) Cleared the April high 210.92 with next overhead at November 2015 high 211.66. Has to hold 208.50

Russell 2000 (IWM) 118.45 overhead resistance. 115.00 major support

Dow (DIA) 176.85 support, 178 pivotal 180 places to clear

Nasdaq (QQQ) 110.60-111 remains resistance. Has to hold 108

XLF (Financials) 23.50 pivotal. 24.00 next point to clear

KRE (Regional Banks) 42 resistance with 41.00 support

SMH (Semiconductors) Inside day. Resting 56.25 support

IYT (Transportation) Has 2 hurdles. The 50 DMA at 140.60 and the weekly MA at 140.10. Really needs to hold 138.50 area to keep in the game

IBB (Biotechnology) If holds 275 could see 290 or higher

XRT (Retail) 2 Inside days. Granny watchers take note. 41.75 is the support to hold. Resistance up to 44.75

IYR (Real Estate) Inside day above the 50 DMA