Boyz to Men-Step Back to Small Caps & Growth Stocks

September 27, 2023

Mish's Daily

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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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

CMC Market Daytrading Commodities Ahead of the FOMC 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


Coming Up:

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


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 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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