After the market has absorbed bank crises, debt ceiling talk, the Fed Funds rate at 5.25%, earnings misses and beats, calls for recession and hopes for lower inflation, we have plenty more to say.
Since I will be joining Maggie Lake and the folks at Real Vision at 4 PM ET (you can find it on their channel on YouTube), I thought sharing my notes in preparation for that would be a good comeback for my Daily writing.
The S&P 500 charts show 2 different timeframes.
The first is the daily chart.
SPDR® S&P 500 (NYSE:SPY) is in a daily bullish phase. The price is not too far from the early May peak, which sits just under the 23-month moving average or 2-year business cycle.
The Real Motion indicator illustrates no real divergence as that, too, is in a bullish phase.
On the weekly charts, SPY is also in a bullish phase above both the 50 and 200-WMAs. Momentum here has a divergence.
SPY momentum sits on the 50-WMA which sits beneath the 200-WMA or in a recuperation phase.
What do these charts suggest?
Based on this “Would you sell in May, and go away?”
Market resiliency with just a touch of pessimism.
Some areas to watch:
SPDR® S&P Regional Banking ETF (NYSE:KRE) or Regional Banks-if the price holds 37.05 then it is possible the worst is over. If that level fails, expect more bad news.
The Economic Modern Family-regardless of what SPY is doing, the Russell 2000 (IWM) needs to hang in there and clear 180. Granny Retail XRT, must hold 60.
Transportation IYT is a bright spot and if clears 230-the case for more upside is clearer.
Inflation-basic materials lag, but industrial metals particularly copper ($3.93), played catch up.
Precious metals (gold $2028 Silver $25.70) continue to outperform. With CPI PPI this week, we will know a bit more although CORE PCE is still high.
Oil-China consumption rose. Brent Crude Oil rallied to $77.00 per barrel. Above $80 shorts will cover and energy will rebound higher.
102 stocks made new 52-week highs today. Shopify (NYSE:SHOP), O’Reilly, Shake Shack (NYSE:SHAK), Builders FirstSource are a few.
111 stocks made a new 52-week low. Match.com and Tyson Foods (NYSE:TSN) stood out.
Tech stocks-Apple looks amazing as does Microsoft (NASDAQ:MSFT), Nvidia (NASDAQ:NVDA). SMH the ETF is over a key monthly MA and could expand.
Dollar-as long as it holds 100.70 neutral.
Some picks:
Live Streaming Sports and Music
Country ETF Vietnam
Biotech stocks
Copper
Our discretionary trading strategy:
- Buying instruments close to but holding the longer-term MA,
- Shorting instruments that have failed the shorter-term MA
- Buying momentum on instruments that are clearing the shorter-term MA.
- Keeping all trading light until the SPY clears the shorter-term MA. And when/if SPY does, we will buy but also watch to see if small caps (IWM) can get close to its MA at 200.
My prediction-SPY QQQs DIA continue to rally until IWM cannot clear $200-then everything sells off again.
ETF Summary
- S&P 500 (SPY) 23-month MA 420
- Russell 2000 (IWM) 170 support - 180 resistance
- Dow (DIA) Over the 23-month MA-only index
- Nasdaq (QQQ) 329 the 23-month MA
- Regional banks (KRE) 42 now pivotal resistance
- Semiconductors (SMH) Split 2:1 now above 23-month MA at 124
- Transportation (IYT) 202-240 biggest range to watch
- Biotechnology (IBB) 121-135 range to watch from monthly charts
- Retail (XRT) 56-75 trading range to break one way or another