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What Does "Shake it Up" Mean for Your Money?

October 31, 2016

Mish's Daily

By Mish Schneider

These Native American women with closed eyes and opened mouths hold their empty vessels out in prayer. The golden cloths attached to each one’s sleeve is the visual plea to Mother Earth to fill the empty vessels with bounty.

We are a week away from the Presidential election. The markets also seem to have closed eyes and opened mouths.

With so much sidelined cash, investors hold out empty vessels hoping for their coffers to be filled. However, the golden cloths hanging from the market’s sleeves suggest a different visual plea.

Over the weekend I wrote, “Keep eyes on the treasury yields. Looking at the 20+ Year Treasury Bonds, a hold of 130 could mean yields will soften.”

Today, yields did soften. If the market does pray, I imagine it is to the Central Banks to keep rates low. Some might suspect negative rates on the horizon.

Yet, will the Banks fill the vessels? Better yet, can they considering the current environment?

Last week the topic of stagflation came up. A scenario where rates remain artificially low while the economy slows can create a financial situation that reflects the current mood of much of the country- “Shake it Up, Baby!”

But What Does “Shake it Up” Mean for Your Money?

Not so unlike last year, NASDAQ roared to new highs only to fall into a strengthening warning phase four days later.

I pick on NASDAQ because it was the holdout of the four indices. The Russell 2000 already broadcasts a warning that tougher economic times could be on the horizon. The Dow has kept 18,000 in check but for how long?

Retail, 70% of the GDP, certainly struggles in a now Distribution Phase. Biotechnology, the big tell on how confident speculative money is or isn’t, joined Granny Retail in Distribution.

Keep in mind America, that “Shake it up” also infers “Twist and Shout.”

On the opposite side of the stagflation coin is rising inflation. True, premature to make claims of out of control inflation. Nevertheless, the metals, particularly copper and steel well outperformed the market. Plus, Gold, Silver and Miners gained.

Shake it up sounds great on paper. Twist and shout sounds like fun. I caution you though, that the BFF of the market is certainty.

The Native American women pray knowing exactly what bounty they want to receive from Mother Earth. The uncertain factor is not what they receive but how much of it they receive.

Like never before, America holds out empty vessels and prays to receive a system that shakes up EVERYTHING.

Hence, we have no idea what we might receive let alone how much of it. The uncertain factor is EVERYTHING.

S&P 500 (SPY): 214 pivotal 211.20 support

Russell 2000 (IWM) 120 pivotal with support 117 area

Dow (DIA) 180 do or die support area and 182.50 resistance to clear

Nasdaq (QQQ) 117.50 pivotal. Next support 116 then 114.50. Needs to get back over 119.

KRE (Regional Banks) Inside day. 44 pivotal area.

SMH (Semiconductors 68.00 pivotal with 67 support

IYT (Transportation) 143.25 the 50 DMA support and a move above 146 best

IBB (Biotechnology) This is the scary part-it hasn’t closed below the 200-week moving average for 2 weeks in a row since 2009. Week one now done

XRT (Retail) 40.00 area the underlying support. A miracle would be a move back over 43.00

HACK (Purefunds ISA Cyber Sec ETF) Inside day above the fast MA.