September 27, 2023
By Mish Schneider
We started this year looking at the monthly charts and the 2 moving averages that depict business cycles.
Back in February we wrote:
“All in all, the key sectors (retail, transportation) have more to prove especially by clearing the 23 month moving average or 2 year business cycle.
This is a significant level as these sectors proved recession was held off when they both held the 80 month moving average or their 6-7 year business cycle low.
So, after 2021 was a huge up year and 2022 was a huge down year, 2023, if clears a 2 year cycle, looks way better for the economy and market.”
Subsequently, Retail (XRT) never cleared the 23-month MA while Transportation (IYT) did.
That prevented us from feeling too confident in a sustaining rally with retail weak. However, as you can see, the picture has changed.
Retail XRT threatens the 80-month moving average once again.
Transportation IYT has failed the 23-month in September. That gives us two reliable indicators for moving ahead.
Can Retail hold the 80-month MA?
If not, here comes recession.
Or can IYT return over the 23-month engendering more confidence?
Perhaps the small caps and NASDAQ index can shed more light.
Small caps (IWM) fell below the 23-month MA after spending only one month above it.
The failure in August to hold above the blue line or 2-year business cycles is a pretty clear sign the higher rates are having an impact on the Granddaddy of the US economy.
Conversely, NASDAQ QQQ broke above the 2-year business cycle high in May 2023. Price ran from $328 to $388 in 3 months as AI and growth have been the winners for a long time.
This move lower can see a retracement in QQQ back to 328.
Then, so much depends on what happens with IWM XRT and IYT.
Nonetheless, one thing is safe to presume.
If XRT keeps recession at bay and IYT can rebound back into some expansion, growth will continue to outperform.
And, if XRT indicates a recession is coming and IYT plus IWM fail their 80-month MAs, QQQ may still outperform.
But we would wait for a move down to 275 as the better buy opportunity in that index.
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"I grew my money tree and so can you!"- Mish Schneider
Mish in the Media - All clips here
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
Business First AM 09-19-23
Yahoo Finance Chart Analysis 09-19-23
CMC markets Daytrading Commodities 09-19-23
Business First AM TEVA 09-14-23
IBD Investing 09-13-23
Traders Edge Jim Iuorio Bob Iaccino 09-13-23
September 29 Live Coaching
October 2 Schwab The Watch List
October 4 Jim Puplava Financial Sense
October 5 Yahoo Finance
October 12 Dale Pinkert F.A.C.E.
October 26 Schwab at the NYSE
October 27 Live in Studio with Charles Payne Fox
October 29-31 The Money Show
Weekly: Business First AM, CMC Markets
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 cant 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) 225 next support
Biotechnology (IBB) 125 if clears impressive
Retail (XRT) 57 key support
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