The Market is Not Dead Yet

May 24, 2023

Mish's Daily

By Mish Schneider


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Paying attention to the media and all the fearmongering around the debt ceiling, we can see the results to both the futures and stock markets.

I want to take a rare U-turn from technical signals (after this week focusing on the Economic Modern Family) and detail options to resolve (temporarily) this current crisis.

To review the technical macro, the S&P 500 failed to clear the 23-month or 2-year business cycle high at 420.

The small caps or Granddad Russell 2000 (IWM) has not even come close to the 23-month Ma and is now at threat of breaking the 6–8-year business cycle lows or the 80-month MA. Even more so for Granny Retail (XRT).

However, nothing has broken down yet.

The market is both fearful and optimistic-perhaps a different way of explaining stagflation?

I learned today that there are other options to temporarily resolve the political quagmire unless-and it seems like a ginormous unless-the White House agrees to a 2-year spending freeze.

  1. Short-term extension of the deadline-kicking the can.
  2. Senate vote or House discharge petition-Treasury then gets money to pay quarterly taxes-which funds them through the summer-kicking the can.
  3. The Concord Coalition (nonpartisan) takes money from Social Security-kicks the can.
  4. Treasury issues CONSOL bonds-no pay back date but high interest rate-more dangerous kicking can.
  5. 14th Amendment-validity of debt unconstitutional-kicking a can filled with legal ramifications.
  6. Mint a $1 trillion dollar coin-kicking a gimmicky can.

(Notes taken from Heather Long WaPo)

How are investors feeling?

Squeezed.

Today’s current environment has created a consensus of protecting and preserving capital, yet at the same time, having some money at risk for when trends emerge.

There is always a bull market somewhere, right?

And I think many will agree that the economy should not contract very much more.

But that is a whole different story than the economy can expand-which could take years.

Just look at the monthly charts of SPY IWM and XRT and their 2-year versus 6-8-year business cycles.

We are stuck in between.

 

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Mish in the Media -
All clips here

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

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Coming Up:

May 25 Mario Nawfal Twitter Space

May 25 Wolf Financial Twitter Spaces

May 31st Singapore Radio with Kai Ting 6:05 PM ET MoneyFM 89.3

June 2nd Yahoo Finance

 

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ETF Summary

S&P 500 (SPY) 23-month MA 420 Support 410 held

Russell 2000 (IWM) 170 support - 180 resistance

Dow (DIA) Right down to its 200-DMAand a confirmed caution phase

Nasdaq (QQQ) Worst case-a potential reversal top on weekly chart-best case-gets thru the weekly highs

Regional banks (KRE) Did the initial damage now sidelining

Semiconductors (SMH) 23-month MA at 124 with just a few days left-still wonder woman

Transportation (IYT) Like to see this hold 220 this week

Biotechnology (IBB) 121-135 range

Retail (XRT) 56.00 the 80-month MA while momentum is at least flatlining

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