January 31, 2023
By Mish Schneider
Written by Michele Schneider
Monday, the Daily covered some of the warning signs, particularly in the Regional Banks and Transportation sectors.
We ended the Daily by writing this:
“Transportation and Regional Banks make up nearly 1/3 of the Economic Modern Family.”
On their weakness..”Of course, the week is young, so we have time to see if both sectors play catch up or are sending us a meaningful warning message.
Either way, they are not to be ignored.”
Apparently, they heard us.
Both sectors rallied with the overall market.
We are still sticking to the trading range thesis. Max upside for the SPY 420 with 400 the pivotal area to hold.
Also, have you noticed that many commodities flew today as well?
Coffee, sugar, lumber, wheat, the agricultural ETF DBA, and orange juice to name a few.
The Fed may not have noticed and that should have investors worried down the line.
Nonetheless, let us cover the chart of the NASDAQ 100 (QQQ) for the good news.
Note the 2 elliptical black circles on the bottom of the chart.
The one on the top line is an indicator from our Triple Pay tool, Leadership.
Currently, the QQQs are outperforming the benchmark SPY. Yet, similar to price, there is resistance near last Friday’s price.
Growth has overtaken value for now-seemingly on the ideas that Fed will pause and inflation has peaked.
The Real Motion indicator proves to be even more fascinating.
The price chart shows the 50-daily moving average below the 200-DMA by a sizeable margin. The inference is that by the time the 50-DMa catches up (if it catches up, the rally could be at the end of its run.
Furthermore and not surprisingly, the price level it is trading at on Tuesday is inside the trading range of Monday..
As far as the momentum though, the RM chart illustrates a clear divergence.
Momentum first off, had a golden cross (50-DMA clears the 200-DMA.)
Secondly, the red-dotted line (momentum gauge) is well above both moving averages.
This means that momentum is well outpacing price. Now, we wait for the price to confirm by closing above its 200-DMA.
Auspiciously, with FOMC Wednesday, that could happen or not happen very quickly.
MarketGauge’s Nasdaq 100 All-Stars Trading Model has over 40% position profits right now.
Tuesday night before the start of the new month, that model will rank the strongest stocks in the NASDAQ. Again, auspiciously ahead of the FOMC.
Is momentum telling us that the NASDAQ 100 has a new leg higher on the horizon?
We believe that inflation will eventually put the kibosh on growth stocks and most likely most stocks.
But for now, the math looks like that notion for now, is discounted.
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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Mish in the Media
Cheddar TV 01-30-23
Real Vision 01-27-23 and on our Youtube channel
BNN Bloomberg 01-27-23 or on our Youtube
Making Money with Charles Payne 01-26-23
The Street.com with JD Durkin 1-26-23 or on our YouTube
CMC Markets-Video on Commodities 01-25-23 and on our MG Youtube
S&P 500 (SPY) Let’s not forget the Dec highs and 400 support
Russell 2000 (IWM) Canceled the glass ceiling-good thing 202 major resistance
Dow (DIA) 2 inside weeks developing-that will be interesting by Friday
Nasdaq (QQQ) Glass ceiling still in place til it clears 298.26
Regional banks (KRE) Rallied right to the 200-DMA-if clears 64 next
Semiconductors (SMH) Glass ceiling still in place til it clears 241.19
Transportation (IYT) Nice comeback-now must clear and close over 232.55
Biotechnology (IBB) Multiple timeframes count and this failed the 23 month MA so far
Retail (XRT) Granny wakes up-and in the lead-inflation not felt here at this point-til then very positive
Every day you'll be prepared to trade with: