The Economic Modern Family Forecasted Today’s Bearish Roar

October 1, 2019

Mish's Daily

By Mish Schneider


The Economic Modern Family has been struggling to see common ground since last October.

While they all sank into December, not all of them rallied off that low into 2019.

Today, they got in the last, “I told you so,” as the market took a 343.79 point dive.

The bear awoke from his perch as a mere hunting trophy

Will the Family resolve their differences soon?

Or will the roaring bear create even more disagreements among the MF sectors?

We have been talking about a wide trading range for some time.

Considering the September low in the Russell 2000 is at 146, today’s move awakens the bears, but for how long?

Furthermore, this move sets the stage for the other aspects we have continually mentioned to watch-

  1. Lower rates in the US in addition to the already negative rates elsewhere-that impact.
  2. The dollar, having been super strong (like bull) finally giving up its strength-will it remain the world’s currency?
  3. The commodities, particularly the agricultural and soft commodities finally bottoming out. Check out sugar, corn, soybeans
  4. The case for potential stagflation. ISM weak while commodities run today-precursor?

But for now, these are questions to consider. The market needs a bit more time to tell us what’s next.

The disparate Modern Family though, has been telling us to exercise caution for nearly a year.



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S&P 500 (SPY) Price broke below the 294.60 50-DMA. Based on the weekly chart, 293.28 pivotal support

Russell 2000 (IWM) Broke both the 151.86 50-DMA and 151.33-200-DMA. Now the resistance with 146 the September low.

Dow (DIA) Sitting at the 165.76 50-DMA now pivotal.

Nasdaq (QQQ) Breached the 188.88 50-DMA. However, slightly diverging from the overall bearish sentiment. The 200-DMA as well as the 200-WMA show a positive slope upwards. Indicating the selling momentum may be short lived.

KRE (Regional Banks) Off the weekly charts, 52.79 50-WMA threatening to cross under the 52.26 200-WMA in strong downward momentum.

SMH (Semiconductors) 116.41 50-DMA, 106.87 the 200-DMA, 104.89 50-WMA, 87.39 200-WMA. All positively sloped. The outlier of today.

IYT (Transportation) Broke 185.86 50-DMA, 184.67 200-DMA, as well as the 184.88 50-WMA. 180 minor support

IBB (Biotechnology) Below all moving averages on the daily and weekly. Foreshadowing a more conservative market less willing to gamble on volatile Biotech.

XRT (Retail) Holding the 42.12 10-DMA. A breakout above the 42.94 200-DMA is ideal.  Under 42.12, 41.15 the ultimate support

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