As Keith and I are heading on a vacation (with social distancing) starting Monday for 3 weeks, this is the last Daily that I will write until September 1st. Yet, not to worry, Geoff Bysshe will be taking over both my subscription service and the writing of the Daily blog. And if you do not already know this, he is awesome!
Hence, I want to repeat 3 major themes to watch. The first is the focus on the Junk Bonds and High-Grade Investment Bonds (JNK, LQD). The second is the focus on the banking and financial sectors of the market. The third is the dollar, low rates, rising metals, up move in sugar and all the factors that still support a stagflation theory.
As long as the Federal Reserve continues to buy debt and high-grade corporate bonds, there's no reason to get negative on the market. Also, on that point, any sell-off will surely be met with more Fed accommodation, as well as more government stimulus.
That brings me to why the banks should remain in your crosshairs.
Here is where we see the stress of large unemployment, business foreclosures and loan repayments. Banks can catch up or remain a ball and chain that might eventually lead to a US downgrade or, at the very least, a reason the market will top out.
Finally, with the gold's parabolic rally, the dollar drowning, the rates dropping and the money supply constantly growing, stagflation is real. That means watch and trade not only gold and silver, but also the other commodities such as palladium, copper, sugar, lumber and oil.
The food commodity prices are still at a 100-year low versus the SPY. So wheat, corn and soybeans are probably the cheapest investment you can make as at some point. The demand for food must grow, while the production of it has declined.
That is all.
Thank you all for your loyal following and readership! I will see you soon.
Best to you,
- S&P 500 (SPY): 332.58 gapped filled, now pivotal
- Russell 2000 (IWM): 149 key support
- Dow (DIA): 270 now pivotal
- Nasdaq (QQQ): New all-time highs
- KRE (Regional Banks): 36.80-38.70 range to watch
- SMH (Semiconductors): 165-168 pivotal support as it is over an ascending channel
- IYT (Transportation): 179-180 now key support
- IBB (Biotechnology): 142 resistance, 136 support
- XRT (Retail): 50.00 pivotal
- Volatility Index (VXX): Did not confirm the inverted doji
- Junk Bonds (JNK): 105.60 support
- LQD (iShs iBoxx High-Yield Bonds): New highs
Director of Trading Research and Education