Last week was the January six month calendar reset. For the S&P 500 Index, that range is 3770-4000.23.
In our Outlook 2023, the prediction we made for the annual range is much broader, or between 3200-4200. This is based on the position of two major monthly moving averages. Looking at the 6 month range, today’s high was 402.64 but if you look at the SPY chart above you will see that it closed at 400.52. That’s just slightly above the range and well below the daily high. The 50 week is also interesting moving averagewhich SPY has yet to delete.
So positive action? Yes!
The signal for a mature long position? Not so fast. What does the momentum tell us?
Before we get into momentum, let’s now look at a few other interesting areas of potential importance ahead of many gains, the PCE number and a Federal Reserve blackout period.
First there are junk bonds and the two ETFs we are monitoring, HYG and JNK. Both are critical for market breadth, and both closed red and trail behind SPY. That makes the exuberance now suspicious.
Notice the bottom of the chart. The blue line is well below the red line – that means underperformance.
Our real motion indicator helps assess growth, slowdown or changing momentum in any tradable financial instrument. As the chart shows, momentum in high-yield-grade bonds is moving sideways after a sell signal (mean reversion) over the past week.
Returning to SPY, momentum is reflecting resistance just near the calendar range, promisingly. Just below the dotted line (Bollinger Band) we need more momentum to be confident this rally can continue.
One market we’re keeping a close eye on is small caps.
The Russell 2000 is the leader of the Economic Modern Family. January 6-month range high is 187.84. IWM closed below this level. Momentum tells us that after last week’s mean reversion, Monday’s retest of the Bollinger Band is worth noting.
Alltogether:
- SPY Rallies to resistance, showing “meh” momentum but slightly clearing calendar range high – neutral to bullish
- HYG underperforming the SPY and rallying into momentum resistance – neutral to slightly bearish (also trading well below its 6-month calendar range high).
- IWM closes below calendar range high and momentum tests resistance – neutral to slightly bullish.
bottom line
Bulls need to see more – more momentum, higher prices and satisfied high yield bonds.
Bears need to see more – SPY and IWM fall from here, momentum fades and high yield continues lower.
yes it is that close
Information collected from:
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Mish shows why gold is still the brightest in this performance Make money with Charles Payne!
In Singapore, Mish discusses China and whether markets have bottomed from here or are headed down on CNBC Asia.
In Stock Charts TV Charting Forward 2023Mish sits down with a panel of experts to have an open discussion about what they see and hear about in the markets.
Mish presents her outlook for 2023 and gives you 6 trading ideas from macro to micro in Thursday 12th January Stock Charts TV Your Daily Five.
Mish and John discuss how stocks and commodities can come together to a point this appearance on Bloomberg BNN.
Mish and the team discuss their prospects and why inflation will persist, with a focus on gold this appearance on Benzinga.
As the weekly charts continue to speak of a bear market rally, Mish and presenter Dave Keller discuss the promise of the daily charts the Tuesday, January 10 issue of The last bar (full video here).
In this appearance on Business First AM, Misch discusses global inflation concerns.
- S&P 500 (SPY): SPY broke above 200-DMA and is now slightly above it, but is still a very narrow price range below 50-DMA. Had key support and what was resistance is now support at the 200-DMA. Resistance is 405 overhead.
- Russell 2000 (IWM): Filled the gap and continued to hold the 200-DMA and overhead resistance at 189.
- Dow (DIA): Back under the 50-DMA quiet as industrials lose ground versus tech but hold support at 335 and attempt to scale the 50-DMA at 336.07.
- Nasdaq (QQQ): Crossed 50-DMA on Friday to close above it. The first level of resistance comes in at 200-DMA and closes slightly below.
- Regional Banks (KRE): Near the intersection of 60.72 (50-DMA). The first level of support lies at 58 and resistance at 50-DMA.
- Semiconductor (SMH): On the 50-WMA and 200-WMA, the button support still holds up easily. 221 support and 228 resistance.
- Transport (IYT): Still holding 225 key support here, now holding the first level of support holding 227.
- Biotechnology (IBB): Still best sector with 132 still holding key support and holding first level support at 134 now with 137 resistance.
- Retail (XRT): Holding central support at 63. Resistance at 66.
Misch Schneider
MarketGauge.com
Director of Trade Research and Education
Misch Schneider serves as director of trading education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and training to thousands of individuals, major financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial professionals to follow on Twitter. In 2018, Mish was the winner of Top Stock Pick of the year for RealVision.
