A Different Market Pattern

Pre-pandemic, once the Trump administration took office, we saw a new pattern emerge.

Before the world went on lockdown, the market moved up and down (with some autonomously strong exceptions in tech), based on headlines from the President himself. But, during the pandemic, Powell became the “Headline Mover-in-Chief.” Yet, in the final analysis, the Pandemic turned out bigger than anyone.

Currently, barring a second wave, the worst is behind us. So here we are back to that more recent pattern. Like the photograph, weeds grow through the grass, that is both lush and scorched. The grass is evergreen, while the weeds are ephemeral. What does that mean?

Weeds are like headlines.

The more speculative ones that negatively impact the market (China trade deal on or off) are ephemeral. However, they leave a small scorch on the market. Nevertheless, once the market moves down with any potential conflict, a new more positive headline emerges, and the greener grass prevails.

Over the last 3 years, we can almost chart it. This week, with all the threats of the US retaliating against China due to Hong Kong, the market barely moved down. On Friday, the market began in the red (scorched), and, after Trump’s press conference that yielded nothing concrete on the trade deal, the Dow closed green (lush). Hence, all support levels held, with a strong potential for more upside come this week. Again, that upside potential implies that nothing definitively catastrophic, like a second wave, revolution or war, occurs.

On May 28th, I did an 80-minute comprehensive segment on Real Vision, covering everything from current market conditions, the stagflation debate, which commodities to watch and how to trade them, then gave out two of my hot picks (skin in the game) with specific guidelines. Please click this link to watch.

  • S&P 500 (SPY): 300 support, 313 resistance
  • Russell 2000 (IWM): Closed red – a quick trip back over 40.00 and you have Friday low as support
  • Dow (DIA): 263 resistance with 250 support
  • Nasdaq (QQQ): Looks like all-time highs are in the cards
  • KRE (Regional Banks): 40 pivotal, 35 key support
  • SMH (Semiconductors): 137.50 support – still has gap to 144.96
  • IYT (Transportation): 156 support, 163 next resistance
  • IBB (Biotechnology): Noise until it takes out 136
  • XRT (Retail): Holding the 200-DMA

Mish Schneider


Director of Trading Research and Education