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Let’s Not Forget the Most Relevant Market Basics

July 15, 2024

Mish's Daily

By Mish Schneider

With the aftermath of the horror of the weekend, the market responded with presuppositions of a Trump victory.

However, we believe that these presuppositions might be a bit premature.

November is still far away.

January 2025 is even further away.

And the market, although tends to run 6 months advance, behaved as if it knows that:

Trump will lower taxes
Trump will drill for oil and gas and ignore alt energy
Trump will execute hawkish trade policies like tariffs
Trump will support Bitcoin and crypto
Trump will put pressure on Powell to lower rates
The dollar will be stronger
Trump’s Truth Social DJT will earn revenue
Cannabis has no chance of a rescheduling

I have 2 reactions to this:

Trump, if he wins, has been known to go with the popular consensus so that any of the aforementioned policies can change if a bigger headline that is out of anyone’s control engenders a change
The economy still has to contend with a nuanced inflation narrative, geopolitics, and the confidence of the consumer. After all, it is the consumer and not just the investor, that needs to feel ok.

Thus far, July has followed the bullish seasonality.

The peak tends to happen on July 17^th and August tends to be a negative month.

Yet happily, we have a new 6-month calendar range reset, which I will be discussing on a webinar Tuesday July 16^th for wealth365.

Let’s see what Granny Retail XRT has to say.
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First off, XRT closed in the red.

Secondly, we now have last Friday’s high 77.66 to use for our calendar range high. That is the level to watch now.

As for the low, 73.11 is the support level to hold.

While the phase is bullish in price, and PAY ATTENTION, this is super important, Real Motion or the momentum indicator, is not above its 50-DMA.

Why is that important?

Well, I suggest you sign up to hear me speak. For now, though I will tell you that at these huge calendar inflection points that could be a really ominous warning.

While we are certainly not panicking as the weekly chart looks solid, we should at least be prepared.

Finally, while XRT sits right on the SPY leadership bar, should XRT begin to outperform, the momentum could shift.

The bigger point goes back to the beginning:

We still have a lot of earnings to go through with very lofty expectations.

Plus-

We have a Fed meeting coming up with a still sticky inflation narrative.

Rate cuts right now might not be well received.

The Yield Curve could be shifting to a dis-inversion-the jury is out on whether that means a recession is coming.

Gold is acting like it’s nervous.

Seasonality is not in the market’s favor.

Geopolitics continues to create uncertainty.

Educational purposes only, not official trading advice.

For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
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