This week we presented the 23-month moving average or 2-year business cycle and what it means for the indices.
In particular, when we were talking about the S&P 500, we wrote:
- In 2021, there was an uptrend based on easy money.
- Inflation has been hotter than most expected.
- Central banks were caught off guard… and by 2022 the party was over.
So this really begs the question of why this year’s 23-month moving average is one of the most important indicators for stocks.
Now what about gold? Anyone who’s followed us, and Mish in particular, knows how bullish we are on the metal. And after hearing Tuesday night’s State of the Union address, we’re even more optimistic. These thoughts will be published over the weekend as an addendum to Outlook 2023.
Let’s look at the monthly chart of gold. The SPY and Russell 2000 (IWM) charts both showed them ending their rally just below the 23-month MA. Of course that could change. Gold, on the other hand, is above the 23-month MA and the 2-year business cycle. It broke above the major moving average in December, saw a continuation in January 2023 and is holding gains through February so far. Should gold approach around 168-170, it would look like a low risk buying opportunity.
If SPY and IWM fail to break out of their 2-year cycles while gold already has – watch the charts. They tell you everything.
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- S&P 500 (SPY): 420 resistance, with 390-400 support.
- Russell 2000 (IWM): 190 now support and 202 main resistance.
- Dow (DIA): 343.50 resistance and the high of the 6-month calendar range.
- Nasdaq (QQQ): 300 is now the crucial range.
- Regional Banks (KRE): 65.00 resistance.
- Semiconductor (SMH): 248 is the 23-month moving average – key.
- Transportation (IYT): The 23-month MA stands at 244 – now resistance.
- Biotechnology (IBB): lateral action.
- Retail (XRT): 78.00 the 23-month MA resistance and the nearest support 68.00.
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.
