Is Stagflation Creeping up?
Michele Schneider | Jun 20, 2021 04:22AM ET
After Wednesday’s Fed announcement, the stock market has been sitting in an uneasy state.
The U.S dollar—Invesco DB US Dollar Index Bullish Fund (NYSE:UUP) not only firmed, but pushed over resistance from its 200-Day moving average at 24.69, confirming an accumulation phase.
Additionally, the iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT) ran up along with the dollar, creating worry among investors that the market is slowing in pace.
However, the NASDAQ 100 Invesco QQQ Trust (NASDAQ:QQQ) made an inside day chart pattern which was a consolidative/pivotal chart pattern.
Meanwhile, the other major indices including the Dow Jones SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA), Russell 2000 iShares Russell 2000 ETF (NYSE:IWM), and the S&P 500 SPDR® S&P 500 (NYSE:SPY) sold off through the day on Friday.
Of the 4 indices, only the QQQ was holding a bullish phase over its 50-Day moving average.
Come Monday, if SPY and IWM have a second close under their 50-DMA they will confirm a cautionary phase change.
This shows a potential weakness if only the tech-heavy index QQQ holds when the rest of the indices are break lower. Furthermore, the economy could also be shifting into something Mish has been talking about for a long time now. Stagflation.
Stagflation refers to an economy that is experiencing a simultaneous increase in inflation and stagnation of economic output.
For now, we will plan to continue watching the QQQs for a further divergence from the other indices, as well as the commodities, such as, precious metals and Food, which are potential hedges against an inflationary period.
h2 ETF Summary/h2- S&P 500 (SPY) Will confirm caution phase with second close under the 50-DMA at 417.33.
- Russell 2000 (IWM) Broke the 50-DMA at 224.23.
- Dow (DIA) Without near support DIA needs to hold and get back over 335.20.
- NASDAQ (QQQ) 342.80 pivotal area.
- KRE (Regional Banks) 63.38 next support area.
- SMH (Semiconductors) 244.94 the 50-DMA.
- IYT (Transportation) Needs to find support.
- IBB (Biotechnology) 154 support.
- XRT (Retail) Watching for second close under the 50-DMA at 91.80.
- Volatility Index (VXX) Held over the 10-DMA. 36.18 next resistance level.
- Junk Bonds (JNK) 108.94 support.
- XLU (Utilities) 63.15 support.
- SLV (Silver) 23.93 pivotal.
- VBK (Small Cap Growth ETF) 278.27 needs to hold.
- UGA (US Gas Fund) Sitting in pivotal support area.
- TLT (iShares 20+ Year Treasuries) 34.68 pivotal.
- USD (Dollar) Confirmed accumulation phase with second close over 91.51 the 200-DMA.
- LIT (Lithium) 66.17 support.
- XOP (Oil and Gas Exploration) Needs to hold 90.51 area.
- DBA (Agriculture) Inside day.
- GLD (Gold Trust) Watching for bottoming patterns.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.