October 5, 2017
By Mish Schneider
Ok, so I’m a bit of a voyeur.
Although of a different ilk, so is this man.
Technology has made it possible for us to turn on and plug in. Anywhere and everywhere. 24/7.
And why not? Given the stresses of the world at large, the market is our happy place.
Once again, indices roar to new all-time highs.
Besides Sister Semiconductors, the other Modern Family Sectors did not, but did ok regardless.
In fact, Transportation, closed red.
Granny Retail along with our Prodigal Son Regional Banks closed green.
A stronger US Dollar clearing the 200-week moving average helps Retail and Regional Banks.
Nevertheless, a strong dollar can strain commodity prices and certain equities, especially those companies that count on exporting their goods.
Recent dramatic events include proposed budget cuts passing in the House, tax reform, a changing of the Federal Reserve guard and lots of talk about rising wages leading to rising inflation.
Who could conceive of hot tubbing WITHOUTa laptop in hand?
As one who holds my own clutching to some mobile device most of the time, I too find my happy place watching the rally continue.
However, I look for emerging trends more than those that could at any time become long-in-the tooth.
My current focus?
The Federal Reserve and Monetary Policy.
Particularly because quantitative easing and low rates account for a huge part of the bull run since 2009.
And partly because the Fed has begun to discharge a slightly varying tone.
Let’s roll back.
Currently, the Fed’s balance sheet remains large and has barely budged from its highs.
As of September 27th, the balance sheet shows $4.45 trillion.
Before the crash in 2008 it sat at $870 billion.
That means we can still thank the Fed for our current rally.
Nevertheless, the Fed appears restless. Eager to raise and reduce the balance sheet, they seem more enthusiastic that the strong labor market will lead to higher wages which in turn will lead to rising inflation.
If this scenario plays out, we have commodities at extreme lows and equities at extreme highs.
That could turn out as the greatest hedge forthe last part of this decade.
Buy low, sell high.
Soak now, dry off later.
S&P 500 (SPY) Overbought on daily is best I can say. NO signs of a top yet.
Russell 2000 (IWM) 150 now pivotalsupport. Under 149.40 could see end of week profit taking
Dow (DIA) Blast off and now overbought.225.61 now pivotal as the gap low
Nasdaq (QQQ) New highs!
KRE (Regional Banks) 56.00 must hold and 57.26 next place to clear
SMH (Semiconductors) New highs
IYT (Transportation) A low volume topping pattern. 177.40 if holds could change that.
IBB (Biotechnology) 340-343 resistance with now 337 pivotal support.
XRT (Retail) 41.75 the 200-DMA(unconfirmed accumulation day). 42.23 big weekly resistance to clear
IYR (Real Estate) Unconfirmed bullish phase
GLD (Gold Trust) 120.70 pivotal. 119.50 support
GDX (Gold Miners) 22.80 support to hold. A move over 23.53 time to consider.
XME (S&P Metals and Mining) 31.60 key support
USO (US Oil Fund) A weekly close over 10.44 good. 10.00 support. Then 9.80
XLE (Sel Energy Spdr Fd) Unconfirmed accumulation phase
OIH (Oil Service Holders) 25.40 should hold
TAN (Solar Energy) 21.00 major support to hold. Resistance at 22.00.
TLT (iShares 20+ Year Treasuries) 126 resistance with under 123.87 see 122.60 then 119.00
UUP (Dollar Bull) 24.30-40 big area to clear and 24.00 pivotal support
FXI (China) Big mover today. 45.00 new support point to hold