Yesterday, Mish talked about watching junk bonds (JNK) to see if the Fed would continue supporting high risk companies.
Today, JNK had an inside day. This comes after a large red day where JNK gapped lower, breaking its 104.27-106 range. The break also happened to coincide with a major support area dating back to July 23rd. With the 200-DMA close by, we can use this as new support, looking for more consolidation and a move back through 104.27.
Tech stocks, including big names like FB, NVDA, AMZN and ZM, also came back strong today, showing that people habitually run back to growth stocks. This shows that, while the SPY and QQQs confirmed a caution phase change last Friday, buyers haven't thrown in the towel.
While it looks as though the market is attempting to claw its way back up, we can't hide the fact that this current correction has lasted longer than many expected. With so many unsettled political events in the air right now, it can be hard to grasp what the Fed will do next.
We are still waiting for a resolution regarding the next stimulus relief bill. Current matters continue to stack against the odds of this swiftly being passed. Will the market keep pushing higher as it holds its breath waiting for this bill to go through, or will it grow impatient and throw a fit? We know we have the Fed's support, so possible pressure from the market itself could be what speeds this process up.
- S&P 500 (SPY): Filled the gap left from yesterday. Either a V bottom or a run to overhead resistance at 335
- Russell 2000 (IWM): Inside day. 145-152 range to break
- Dow (DIA): 275 key resistance to clear
- Nasdaq (QQQ): Rallied right to the 50-DMA
- KRE (Regional Banks): July low is some support at 34.00, with 37.00 place to clear
- SMH (Semiconductors): Needs second day close over the 50-DMA
- IYT (Transportation): 201 resistance to clear with support at 195
- IBB (Biotechnology): 132 held but needs to get back over 135.44
- XRT (Retail): Strong performance over the 50-DMA. Best news
Mish Schneider
MarketGauge.com
Director of Trading Research and Education
Forrest Crist-Ruiz
MarketGauge.com
Assistant Director of Trading Research and Education
