Long Bonds, Small Caps Offer Clues on Market's Next Moves
Michele Schneider | Jul 25, 2023 03:21AM ET
By now, you might have read my piece about the July 6-month calendar range reset.
The chart of the Russell 2000 (IWM) shows a really wide July range.
The red line (low made the July 6 at 180.72) and the high made July 17 at 194.36, gives us a glimpse of a potential trading range.
IWM’s price rose fast in just a few short days since July 6.
Now, as this week begins with a test of the July 6-month calendar range high, should that level break down, it could mean a substantially wide trading range in store for the small caps.
The July low is seemingly far.
Of course, should we see a pop from current levels, then we can surmise more upside with 200 the next level of chart resistance.
Since small caps are a major focus for us, we will watch these levels carefully, especially in this heavy data driven week.
We also are watching Long Bonds through iShares 20+ Year Treasury Bond ETF (NASDAQ:TLT).
The July range here has significance in several different ways.
- So far, it is the high and low of the calendar range.
- Current levels are not far from the high. And, rather far from the low. That tells us, one push above the 200 daily moving average and the green line at 103.26 has definite implications for the market.
- It equally tells us that in between can be interpreted as “noise.”
- Furthermore, a failure of the 6-month calendar range low in red has very different implications for the market.
Put IWM and TLT together, and we will have a solid idea of the next trends.
For fun, we have included a stock. International Paper (NYSE:IP) is on our list.
Get The News You Want
IP is a leading paper and packaging company that stores raw materials such as wood fibers, pulp, and recycled materials for paper production.
The stock surfaced for us when we researched companies that store raw materials as part of our inflation round 2 narrative.
IP stopped right at the 6-month calendar range high. Now in a Recuperation phase (over the 50-DMA), we find the current price compelling.
We show you this so you can see the power of combining trends, phases, chart patterns, and calendar ranges.
Next, if IP sets up, we will ascertain risk, profit targets and position sizing.
h2 ETF Summary/h2- S&P 500 (SPY) 450 pivotal area 455 resistance 437 July low
- Russell 2000 (IWM) 193 is the 23-month holy grail
- Dow (DIA) 34,800 support
- Nasdaq (QQQ) Under its 6-month calendar range high, already showing signs of stress
- Regional banks (KRE) Consolidating over its July calendar highs-positive
- Semiconductors (SMH) Holds here ok-needs to clear 161 and under 147 trouble
- Transportation (IYT) Right on the July calendar range high
- Biotechnology (IBB) 128 support now to hold
- Retail (XRT) Never cleared the July calendar range high-now, 66 is key support
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.