U.S. Stock Market Stuck with a Plethora of Mixed Signals
Michele Schneider | Feb 06, 2023 12:28AM ET
If you are having a hard time figuring out the market’s next moves:h2 1. Think trading range/h2
the 2023 Outlook spells out reasons for a 1000-point trading range potential in the SPDR® S&P 500 (NYSE:SPY) from 3200-4200.
We are adding that the Nasdaq 100 through Invesco QQQ Trust (NASDAQ:QQQ) can head to 330 before topping out. Then just as easily, skid to support at 230.
h2 2. High Yield Bonds Vs. 20+ Year Long Bonds/h2Think about this: the relationship between the high yield/high debt bonds and the 20+ year long bonds is as mixed up as you.
On the one hand, finally, the high-yield bonds are just starting to outperform the long bonds risk on. (See down arrow)
On the other hand, the real motion momentum indicator flashed a mean reversion on junk bonds. (See up arrow)
So the indices are stuck. The bond relationships are stuck. The economic data is stuck. Is recession coming or soft landing achieved? Stuck.
What about inflation, geopolitical stress, climate issues, food shortages, wage increase demand, and social unrest?
Stuck.
Perhaps the Economic Modern Family can help.
The Russell 2000 (iShares Russell 2000 ETF (NYSE:IWM)) or Granddad of the Economic Modern Family, had a golden cross and cleared the December highs (not the August ones though).
202 is where major resistance from the 23-month MA sits. Real Motion shows new highs in momentum. A positive. Triple Play shows leadership against the benchmark. A positive.
Granny Retail (SPDR® S&P Retail ETF (NYSE:XRT)) shows similar technical patterns. Forget the rest and just look at Granny and Gramps, one should think of blue skies.
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Look at the 23-month moving average, though, at 78.00, and XRT trades well below that level. Until proven otherwise, trade with a mindset that the market is approaching the top of the range.
Also, do not get overly complacent about inflation peaking-we still see a potential trainwreck. However, the modern family has an amazing track record. That means above these range resistance levels, follow their lead.
h2 ETF Summary/h2- S&P 500 (SPY): Targets 420 with 390-400 support
- Russell 2000 (IWM): 190 now support and 202 major resistance
- Dow (SPDR® Dow Jones Industrial Average ETF Trust (NYSE:DIA)): 343.50 resistance and the 6-month calendar range high
- Nasdaq (QQQ): 300 is now the pivotal area
- Regional banks (SPDR® S&P Regional Banking ETF (NYSE:KRE)): 65.00 resistance
- Semiconductors (VanEck Semiconductor ETF (NASDAQ:SMH)): 246 is the 23-month moving average-can she holds. Sister Semis is the hare this past week
- Transportation (iShares Transportation Average ETF (NYSE:IYT)): It’s like chips are on a bullet train-this 23-month MA is 244-we are back below that level
- Biotechnology (iShares Biotechnology ETF (NASDAQ:IBB):) Sideways action
- Retail (XRT): 78.00 the 23-month MA resistance and nearest support 68.00
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