The coming week is a big one. We have the FOMC on our hands and some Fed members are calling for a 0.50 basis point rate hike after hot PPI and inflation. We have GDP hot on the heels of a strong retail sales figure, and a record amount of credit card debt could do damage later. We have 600 companies reporting earnings – the biggest earnings week for the last quarter. We have 2 of the 4 key indices that publish 2 within trading weeks which means range within a range within a range.
In other words, the market took a huge pause near the recent highs.
We wrote about the 23-month moving average and the correlation to the 2-year business cycle. The SPY (and most key sectors) stayed right at this moving average. Why is this important? Because unless proven otherwise, not only does it support the trading range theory for 2023, it shows that the rally since October still looks like a bear market rally. Should a soft landing prove to be a possibility, we would like to see the price of indices and key sectors move beyond this 2 year cycle.
With so many now dismissing gold, citing that a stronger dollar and interest rates won’t help the shiny metal, the chart looks very different going back to the same 2-year cycle. Despite being sold off for most of the past week, gold closed in the green on Friday. Gold held the major weekly and monthly moving averages.
Gold, silver, soft and food commodities all closed in the green. Inflation is far from dead. Again, everyone rallied on higher yields and a firmer US dollar.
Well, we might have seen gold futures drop to around $1820 an ounce, then bounce back to $1850, a key pivot, and that’s it. It could also mean that the market remains very optimistic that higher yields, even ½% higher, will not hurt the economy or the market too much. It could mean that countries and hedge funds that have been hoarding gold have bought this decline, while retail investors have shifted their focus more towards AI, defense stocks and consumer staples.
Too early to tell. Nonetheless, just by looking at the chart, we can see that gold is outperforming its 23-month MA or 2-year business cycle while the market remains agnostic at best.
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Mish shares three charts she uses to measure inflation against commodity markets in the Wednesday 14th February issue of StockCharts TV The last bar with David Keller!
Mish gives you some ideas on what could top this new wave of inflation in the Friday 10th February issue Stock Charts TV Your Daily Five. She has the choice between energy, construction, gold, defense and resources.
Read more about Mish’s interview with Neils Christensen in this article from Kitco!
In this appearance Make money with Charles PayneCharles and Mish discuss whether Powell can say mission accomplished.
Mish shares her views on how to approach earnings news from Apple, Amazon and Alphabet, and provides a technical outlook on how earnings results could impact the S&P 500 and Nasdaq 100 in this appearance on CMC Markets.
- S&P 500 (SPY) 420 resistance with 390-400 support.
- Russell 2000 (IWM): 190 key support and 202 key resistance.
- Dow (DIA): 343.50 resistance, 338 support.
- Nasdaq (QQQ): 300 the central area, 290 the mainstay. 2 still working within weeks so consider 311 a good point to delete or fail.
- Regional Banks (KRE): 65.00 resistance, 61 support.
- Semiconductor (SMH): 248 now has to clear up again with 238 support. 248 resistance, 237 then 229 support.
- Transport (IYT): The 23-month MA stands at 244 – now resistance. 228 support.
- Biotechnology (IBB): Lateral action 130-139 area.
- 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 as well as 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.
