June 4, 2023
By Mish Schneider
Last week we asked, “Can the Retail ETF XRT hold here?”
We wrote that the Consumer Sector ETF had some words for you.
So here we are in June.
Granny XRT burned those that assumed she would fail.
The 6–8-year business cycle low as measured by the 80-month moving average held.
Many retail and value names did indeed present traders with a low-risk entry AND relief for the Economic Modern Family.
If you are still in the camp of not believing charts are useful, well, you’re probably not reading this Daily.
Or you are reading this and remain on the fence about the validity of technical analysis.
Even the biggest skeptics must admit that this clutch hold of the 80-motnh moving average is impressive and an important lesson for trading decisions.
Market got a pass for now. Yay.
What’s next on the wall of worry?
Granny Retail has more work to do to prove she is back in the game. On the monthly chart, 60.00 is a good place to watch for XRT to clear or not.
Looking ahead elsewhere, we have explored the idea that NASDAQ 100 can make it to 3800.
Also, that SPX can make it to 4400 and the Russell 2000 can make it to 1950.
But that would be a top because…..
Inflation will come back for a second round.
Debt ceiling passing could be inflationary as the overall debt is larger, while government spending continues.
The dollar is strong, but BRICS grows stronger.
China’s demands for goods also grows stronger.
OPEC+ meets this weekend while oil prices also held key support and are now rising.
The FED could “skip” or pause in June while yields are falling on their own. Let’s not forget that the regional bank crisis was averted with monetary loosening.
Precious metals remain relatively strong as they are above the 23-month moving or in an expanded 2-year business cycle.
Mother Nature wreaks havoc as the latest news is the Panama Canal’s waterways are so low, ships are carrying less weight and the cost to ship goods is rising. On that note, hurricane season has begun.
Russia is once again threatening to pull back on Ukrainian exports of agriculturals.
The point is this.
In our prediction of stagflation, this rally in equities is not unexpected. The market will test the top of the trading ranges.
Nonetheless, we do not expect deflation as so many analysts have mentioned.
We expect that the 25% decline in the CRB will reverse course as demand rises while supply chain issues have not fully resolved.
Regardless, what a fun ride and a very interesting year.
For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
"I grew my money tree and so can you!"- Mish Schneider
Mish in the Media - All clips here
Yahoo Finance Market Wrap up 06-02-23
Singapore Breakfast with Ryan Huang 05-31-23
CMC Markets-Trading Futures 05-31-23
ICW Rajeev Suri Stagflation 05-31-23
ICW Rajeev Suri Debt Ceiling 05-25-23
CMC Markets Futures Daytrading 05-24-23
Business First AM 05-24-23
TD Ameritrade 05-22-23
Daily Briefing Real Vision 05-19-23
Business First Am GME 05-10-23
June 5 Business First AM
June 6 CMCMarkets and Wolf Financial Spaces
June 8 Wolf Financial Spaces
June 22 Forex premarket show Dale Pinkert
June 23 Your Daily Five Stockcharts
S&P 500 (SPY) August 2022 high 431.73-and of course 420 now key
Russell 2000 (IWM) Cleared 180-now must hold while still miles from its 23-month MA 193
Dow (DIA) Back above its 23-month MA making 337 pivotal
Nasdaq (QQQ) 370 resistance 350 now closest support
Regional banks (KRE) Right up to that 42.00 critical level
Semiconductors (SMH) Closed Fri red. Reversal pattern top-A drop near 138-140 would be a decent correction
Transportation (IYT) Highest weekly close since early March-good sign if holds 230 level
Biotechnology (IBB) 121-135 range
Retail (XRT) 60 key now as is 56.25
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