Stock Market Conundrum: Inverted Yield Curve vs Strong Consumer

Michele Schneider

Retail stocks had a good day. 

Target NYSE: TGT and Lowes NYSE: LOW jumped on strong earnings reports today suggesting that the consumer is still strong.

Target is now at an all-time high.

This doesn’t make me want to buy the Retail Sector ETF NYSEARCA: XRT, but it does lend support to the idea that the U.S. economy is not on the brink of recession because the yield curve inverted earlier this week.

target stock forecast tgt chart higher bullish upgrade august 22

The market liked this news, but I think it’s still a little nervous about Friday. 

On Friday, Fed Chair Powell will be speaking at the Jackson Hole Economic Policy Symposium where the topic will be “Challenges for Monetary Policy.”

That sounds like a loaded question (topic) for a central banker to say some thing that could rattle the already nervous stock market bulls. 

It looks to me like the bulls are unwilling to push the market above the current weekly ranges until Jackson Hole is no longer a risk. 

That sounds like a good idea to me too.

Stock Market ETF Levels:

S&P 500 (SPY) Support Friday’s high, 289.33 Resistance at 50-DMA and swing high area, 294.

Russell 2000 (IWM) Support around today’s low, 149.79 and then at 149 area.Resistance at 200 DMA, 151 then 152.70.

Dow (DIA) I’d just focus on range low, 254 and range high 264.60.

Nasdaq (QQQ) Support area around Wednesday’s low, 186.86 then the gap fill at 186, then 184. Needs the swing high, 189.70.

KRE (Regional Banks) Support around 49.50. Resistance at the range high at 51.70 then 51.50.

SMH (Semiconductors) Tight 3-day range.Support at the gap fill at 110.Resistance at 116, then 120.

IYT (Transportation) Support at pivotal area, 180. Resistance 186 then 191. 

IBB (Biotechnology) Sitting just under the 200 DMA. Support at 104. Looks interesting if it can close over 107.

XRT (Retail) First close over the 10 DMA in August. Support at today’s low,38.50, then swing low 37.46. Major resistance around 41.30.

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