3 Key Relationships to Help Assess Market Direction

October 2, 2023

Mish's Daily

By Mish Schneider


If you are finding yourself fluctuating between bullishness and bearishness, then congratulations!

Hopefully, that also means you are waiting for certain signals to help you commit to one way or another.

Here are the signals we are waiting for before overly committing to a bias.

  1. As we wrote over the weekend, how the junk bonds (high yield high debt bonds), do independently, and how they perform against the long bonds (TLT).
  2. How the retail and transportation sectors do (along with small caps) as they represent the “inside” of the US economy.
  3. How DBA (ags) and DBC (commodity index) do relative to the strong dollar and higher yields.


The first chart shows you that a sell signal mean reversion as far as the ratio between long bonds and junk bonds signaled.

However, junk still outperforms long bonds-at this point, that says risk on-but a cautious risk on with junk gapping lower and taking out summer lows (but holding March lows at 72.61).


Retail (XRT) had a solid reversal bottom last week.

Now, must clear last Friday’s highs. And hold June lows… Plus, XRT outperforms SPY right now.



Transportation (IYT) is now underperforming SPY. Although consolidating after braking under the 200-DMA (green), it looks vulnerable.

Could that change? A move over 235 would be a good start.


Looking at DBA, that whole commodities sector is outperforming the SPY. Makes you wonder what would happen if the dollar and/or yields soften.

Trading slightly below the July 6-month calendar range high, we anticipate DBA can continue higher, especially if price retakes the 50-DMA (blue line).

DBC, fell right onto support at its 50-DMA. Momentum also fell into support. Furthermore, DBA also outperforms SPY.

This certainly makes the case for higher commodities and inflation as a trend again, especially if long bonds, and the dollar soften.


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Mish in the Media-
All clips here

Schwab with Nicole Petalides 10-02-23

Business First AM Tesla 09-29-23

BNN Bloomberg Opening Bell 09-27-23

Business First AM on Indices 09-27-23

Benzinga Pre Mkt 09-22-23

Final Bar with Dave Keller  09-21-23

Your Daily Five Stockcharts 09-20-23

Article-Q4 Stock Market Outlook 09-20-23

Article-Kitco Oil 09-20-23

CMC Market Daytrading Commodities Ahead of the FOMC 09-20-23

Business First AM 09-19-23

Yahoo Finance Chart Analysis 09-19-23

IBD Investing 09-13-23

Traders Edge Jim Iuorio Bob Iaccino 09-13-23


Coming Up:

October 4 Jim Puplava Financial Sense

October 5 Yahoo Finance

October 5 Making Money with Charles Payne

October 12 Dale Pinkert F.A.C.E.

October 26 Schwab at the NYSE

October 26 Yahoo Finance at the NYSE

October 27 Live in Studio with Charles Payne Fox

October 29-31 The Money Show

Weekly: Business First AM, CMC Markets


ETF Summary

S&P 500 (SPY) There are multiple timeframe support levels round 420-415

Russell 2000 (IWM) 170 huge

Dow (DIA) 334 pivotal

Nasdaq (QQQ) 330 possible if can’t get back above 365

Regional banks (KRE) 39.80 the July calendar range low

Semiconductors (SMH) 133 the 200 DMA with 147 pivotal resistance

Transportation (IYT) 237 resistance 225 support

Biotechnology (IBB) 120-125 range

Retail (XRT) 57 key support if can climb over 63, get bullish

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