Mish's Market Minute

Mish's Daily: High Interest Rates, Your Portfolio and Next Steps

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On Wednesday, the Federal Reserve is anticipated to raise interest rates by 75 basis points. How will the rate increase affect your portfolio? Depending on your investment holdings, the interest rate increase could have a significant impact.

Higher interest rates could also lead to a decrease in the stock market. The two-year treasury rate listed above is now 3.85, and was around half a percent one year ago. The hike this week will increase the cost of borrowing and slow economic growth. Some companies, more than others, will be impacted.

We at MarketGauge have already made considerable adjustments to our trading style, and not just our portfolios. We are using a blended approach.

And while SPDR S&P Regional Banking ETF (KRE) might have a reputation for being a prodigal son, investors would be wise not to overlook it. KRE, a vital part of the Modern Family, plays an essential role in measuring the health of the financial system and the overall economy. Regional banking stocks primarily make their money by commercial and personal lending, so as rates rise, these banks will become more profitable.

They do not make profits in derivatives. Rather, they tend to be heavily involved in lending transactions.

On the chart,

  1. KRE closed over the 50-DMA. It returns to an unconfirmed recuperation phase that needs to confirm with another close above it tomorrow.
  2. KRE outperforms the SPY.
  3. Real motion is showing positive upward momentum.

KRE is undervalued, with plenty of upside potential.

To learn more about how we invest profitably using the Modern Family, please reach out to Rob Quinn, our Chief Strategy Consultant, by clicking here.

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Mish in the Media

Mish and Jon discuss global recession and the 9/21 US FOMC decision impact on BNN Bloomberg.

Mish gives several actionable trading ideas for your watchlist in this TD Ameritrade interview.

See Mish's latest article for CMC Markets, titled "Can the Fed Still Engineer a Soft Landing for the US Economy?"


ETF Summary

  • S&P 500 (SPY): Confirmed bear phase; 384 support, 395 resistance.
  • Russell 2000 (IWM): 178 support, 182 resistance.
  • Dow (DIA): Confirmed bear phase; 308 support, 311 resistance.
  • Nasdaq (QQQ): 288 support, 293 resistance.
  • KRE (Regional Banks): 62.67 support, 64.77 resistance.
  • SMH (Semiconductors): Confirmed bear phase; 202.48 support, 207.20 resistance.
  • IYT (Transportation): 217 support, 222 resistance.
  • IBB (Biotechnology): 120.73 support, 122.60 resistance.
  • XRT (Retail): 61 support, 64 resistance.


Mish Schneider

MarketGauge.com

Director of Trading Research and Education

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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