Mish's Market Minute

The Elephant in the Market

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"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 in the picture just because he's cute. Heck, something needs to look cute after staring at the screens all day!

On the market itself, QQQ 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 okay.

Regional Banks (KRE) looks weaker as well. A move back under 40.00 is 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:

Also, from Tuesday on Wall Street Today, China with Jackie Pang: http://share.fengshows.com/article.html?id=e825ffc0-b053-11ea-9073-6d774002363a&channelID=r06&time=1592409629.499006


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

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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