December 3, 2023
By Mish Schneider
While December 1st brought out the bulls in nearly EVERYTHING, one area caught our attention.
In December 2019 I saw a similar chart showing an unsustainable ratio between equities and commodities which started me on the notion that something had to give.
Now that I see this chart, with emerging markets at 50-year lows versus the U.S. markets, that does not necessarily mean the ratio will unravel in a month, or 2 or even more.
However, it does give us a focus for 2024 at least to watch emerging markets for signs that the ratio could narrow.
In 2020, after Covid, the equities to commodities ratio moved a lot.
It did not sustain though as many commodities peaked by June 2022.
But it was a great 2 year run.
Now in 2023, there is another ratio many are watching-growth and mega cap stocks versus value and small cap stocks.
Friday, we saw that ratio come in a bit with NASDAQ up .32% and the Russell 2000 up 3.09%.
Historical distortions of relationships can offer investors great opportunities in all trading timeframes.
With emerging markets, China has been under tremendous pressure while country funds like Brazil have done well (although still not keeping up with SPY.
The monthly chart of EEM is elucidating.
EEM iShares MSCI Emerging Market ETF ended November and began December very close to the 23-month moving average.
(Compare this to SPY which started December about 3-4% lower than its all-time highs.)
So, for timing, we love these monthly charts.
Should EEM clear the 23-month MA that is a start.
The risk would be clear, under the low of the month EEM close over the 23-month MA.
Then, we would look to see if EEM can clear what appears to be the scene of the breakdown crime or at 42-43.00.
And that’s how you play ratios-you wait for price.
I will be away until December 14th.
Look for my Outlook 2024 “If You Can’t Stand the Heat, Don’t Tickle the Dragon,’ to be out very soon. It is packed with ideas for the new year.
Have a great couple of weeks!
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"I grew my money tree and so can you!"- Mish Schneider
Mish in the Media - All clips here
Business First AM Stock pick-Vaxcyte PCVX 11-29-23
Business First AM All about the bullish case for gold 11-29-23
Schwab Network with Nicole Petallides Mish talks about money supply, debt, the consumer, inflation and trends that could gain traction 2024 11-29-23
Your Daily Five StockchartsTV Good Ole Stock Picking-6 with actionable levels 11-28-23
Business First AM-Mish covers Palo Alto and how the quants picked up this winner 11-27-23
Real Vision Daily Briefing Mish and Maggie cover Inflation, Tech, Commodities and Picks 11-20-23
Yahoo Finance Mish and Rachelle talk trading range, fundamentals and how to think about commodities right now 11-20-23
BNN Bloomberg Open Mish covers the emotional state of oil and gold plus why small caps are key right now..plus a couple of picks! 11-17-23
CNBC Asia Partial Clip on Oil, OJ, Beans and how to trade volatile commodities 11-16-23
Making Money With Charles Payne Fox-Mish discusses small caps and how they could still run, the Fed and gives 3 picks 11-16-23
Business First AM-Tencent Music TME 10-27-23
December 3-December 13 Money Show Webinar-at-Sea
December 14 Final Bar Stockcharts Dave Keller
December 20 Outlook 2024 Stockcharts Panel
December 22 Yahoo Finance
December 28 Singapore Breakfast Radio
Weekly: Business First AM, CMC Markets
S&P 500 (SPY) 450 support 465 resistance
Russell 2000 (IWM) Now 181 has to hold-next resistance 190
Dow (DIA) 360 becomes pivotal support
Nasdaq (QQQ) 388 now pivotal
Regional banks (KRE) 45 underlying support with 50.00 resistance
Semiconductors (SMH) 160-161 pivotal support
Transportation (IYT) Cleared 250 now has to hold it
Biotechnology (IBB) Big eyes here if holds 120
Retail (XRT) 65 now key to hold and 70 resistance to clear next
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