February 27, 2018
By Mish Schneider
U.S. Army Camel Corps.
The scene in the photo depicts a soldier, apparently leading the charge, somewhere in the Southwest, USA, whilst atop a camel.
I find the idea of a camel as mode of military transport fascinating.
In 1855, under the direction of then-Secretary of War Jefferson Davis, Congress appropriated $30,000 for “the purchase and importation of camels and dromedaries to be employed for military purposes.”
75 camels were bought and stationed in central Texas.
Jerome Powell, leading today’s market charge, rode in for his first press conference, apparently whilst sitting atop what we have come to consider a foreign animal-outspokenness about raising interest rates.
Powell said the Fed plans to be more aggressive with the rates and a tightening policy. He cites confidence in the labor market and global strength.
How does the Fed Chairman’s optimism, turn into investor pessimism?
Although analysts interpreted his words as “middle of the road,” many others found them to be hawkish.
Like a General on a camel, I see his stated intentions and views of the economy a bit foreign compared to the careful comments made by Janet Yellen during her term.
Hence, the rally that we wrote needed to confirm, especially in some of the Modern Family sectors, came to a screeching halt.
Yesterday, I did a piece on the TLT chart. The gist was that rising rates looks like it is in its infancy as far as a trend goes, and that could result in something less desirable than economic expansion.
The TLTs, already beneath critical long-term support, reflected the Fed’s intentions.
Today, TLT’s declined further.
The key in the Modern Family and how they mirror investor sentiment is typically on the back of Transportation (the movement of goods) and often times in Biotechnology (IBB), as that’s where speculators show up or not.
Last week we looked at trading ranges and phases.
Yesterday, Transportation (IYT) went into an unconfirmed bullish phase, closing over the 50 DMA at 194.
Biotechnology closed at the top of its trading range 111.50 and needed to find buyers to push it higher.
Today, Transportation (IYT) failed the 50 DMA and the top of its recent trading range and went back into an unconfirmed warning phase. FYI-so did the Russell 2000 (IWM.)
Subsequently, all the Modern Family sectors sold off, along with the mighty NASDAQ 100-an index I never use to judge the state of the economy.
By the start of the Civil War, the camel program was virtually done.
The failure of the U. S. Camel Cavalry was more due to Americans’ attitude toward the animals than to any shortcoming on the camels’ part.
And there’s the point. Powell’s positive sentiment to justify firming up rates, met negative investor attitude.
I love this dance between rates, the dollar, inflation and the market.
In India, a country that reveres their camels, they have camel dance competitions. Thus, the market similarly competes for which indicators lead, and which ones lag.
I will be on the @Benzinga PreMarket Prep show tomorrow morning, February 28 at 8:35 AM EST! Tune in here. premarket.benzinga.com
S&P 500 (SPY) Broke 276 last week’s top of the trading range. 272 level has to hold, or investors will get even more nervous. If it can get back over 276 early on and hold, good. Subscribers: Negative Pivots in all
Russell 2000 (IWM) Once 154 broke, and this flashed unconfirmed warning, this sell off has the chance of becoming menacing to the bulls if it confirms the warning phase
Dow (DIA) Also broke support at 255 (top of the last week’s range). 252.60 is the 50 DMA
Nasdaq (QQQ) 168 now support as this is the closest to the January high of 170.95. If this rolls over, be cautious. I may not use this to judge the health of the economy, but if it holds 168, it should help the overall market for the time being.
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