We can’t start the Daily without mentioning the glitch in the NYSE directly Tuesday morning. A wild stock price swing occurred at the open, and 84 stocks suddenly plummeted or surged, causing volatility triggers and trading halts. The incident is now being investigated.
The Wells Fargo (WFC) chart is an excellent example of how this error wreaked havoc, with the price as low as $38.10 before bouncing back up to $45.00. Maybe we can extrapolate that to another brick in the wall of chaos leading to inflation.
Regardless, earnings season will see the market focus on forecasts and future prospects for many large companies, so today’s glitch could be an aberration — or the universe’s harbinger of things to come.
On Monday we focused on the trading range, calendar ranges, momentum, junk bond performance and the very high probability of a rally into resistance. Today, let’s narrow it down to another of our key indicators in our Big View Market Timing ServiceLong Bonds versus High Yield Bonds.
Tuesday’s action became more of a digestion day across the 4 indices.
The small caps or Russell 2000 (IWM) had an inside day, meaning they were trading within Monday’s trading range. The high of the 6-month calendar range is just above the current level for small caps. As such, we need internal clues as to the next major move up or down.
The iShares iBoxx $ High Yield Corporate Bond ETF HYG looks okay priced. Our Big View defines the ratio or ratio between HYG and TLT as a measure of the ratio between risky high yield corporate bonds (HYG) and the safety of US bonds (TLT).
“When the ratio is trending up and the gap between the ratio and the moving average is widening, it indicates increased risk appetite in the bond markets.”
However, as shown by ours Triple Play Market Indicatorcontinued high yield perform below average the long bindings or TLTs. Although the price of junk bonds is trending higher, this underperformance versus the long bonds can be a warning sign of possible failed breakouts.
Mish’s picks are already up 10-20%, beating the SPY!
Would you like to benefit from their outstanding track record and ensure a profitable trading year? For more detailed trading information, contact Rob Quinn, our Chief Strategy Consultant, to learn more Mish’s premium trading service.
Don’t miss Mish’s 2023 Market Outlook, now available electronically!
click here if you would like a free copy Mish’s 2023 Market Outlook as an e-book in your inbox.
“I grew my money tree and you can too!” – Misch Schneider
Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.
Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To view updated media clips, Click here.
Mish comments on the big NYSE blunder on Tuesday, January 24th in this appearance for BNN Bloomberg!
Mish discusses the ongoing bull market for commodities and why the SPY will remain range bound in this appearance on Business First AM.
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. Central support was held and what was resistance is now support at 200-DMA and resistance at 405 above.
- Russell 2000 (IWM): Filled the gap and continued to hold the 200-DMA and overhead resistance at 189.
- Dow (DIA): Still below the 50-DMA as industrials lose ground to technology but holds support at 335 and narrowly crosses the 50-DMA.
- 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. 230 support and 238 resistance.
- Transport (IYT): Still holding key support here at 225 and now holding first level support at 227. Overhead resistance sits at 232.
- Biotechnology (IBB): Still best sector with 132 key support still holding and holding first level support at 134 now with 137 resistance.
- Retail (XRT): Holding central support at 63. Resistance at 68.
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.
