This week is a big one.
We have FOMC on tap with some Fed members calling for a .50 bps rate hike on the heels of the hot and .
We have on the heels of a strong number while also a record amount of credit card debt could hurt later on.
We have 600 companies reporting earnings-the largest week of earnings for the last quarter. We have 2 of the 4 key indices posting 2 inside trading weeks, meaning a range within a range within a range.
In other words, the market has taken a giant pause near the recent highs. We have written about the 23-month moving average and the correlation to the 2-year business cycle.
The SPDR® S&P 500 (NYSE:) (and most key sectors) all stopped dead in their tracks right at that moving average. Why is this significant?
Because until proven otherwise, it not only supports the trading range theory for 2023, but also shows that the rally since October is still looking like a bear market rally.
Should a soft landing turn out as a possibility, then we would want to see the price of the indices and key sectors move beyond that 2-year cycle.
Meanwhile, as so many are dismissing , citing a stronger and stronger rates will not help the shiny metal, the chart looks very different stepping back to the same 2-year cycle.
Although gold sold off for most of last week, it closed green on Friday. Gold held the key weekly and monthly moving averages. Gold, , soft, and food commodities all closed in the green. Inflation is far from dead.
Again, all rallied in the face of higher yields and a firmer US dollar. Now, it could be that we saw the dip in gold futures to around $1820 an ounce, then the bounce back to $1850, a key pivotal point, and that’s that.
It could also mean that the market remains highly optimistic that higher yields, even ½% higher, will not hurt the economy or the market too much.
It could mean that countries and hedge funds that have been accumulating gold bought this dip, while retail investors have turned their focus more to AI, defense stocks, and consumer staples.
Too soon to say. Nonetheless, if just looking at the chart, what we can see is that gold is following through above its 23-month MA or 2-year business cycle while the market remains agnostic at best.
ETF Summary
- S&P 500 (NYSE:): 420 resistance with 390-400 support.
- iShares Russell 2000 ETF (NYSE:): 190 pivotal support and 202 major resistance.
- Dow Jones Industrial Average ETF Trust (NYSE:): 343.50 resistance 338 support.
- Invesco QQQ Trust (NASDAQ:): Still 2 inside weeks working, so watch 311 as a good point to clear or fail from.
- S&P Regional Banking ETF (NYSE:): 65.00 resistance 61 support.
- VanEck Semiconductor ETF (NASDAQ:): 248 now has to clear again with 238 support.
- iShares Transportation Average ETF (NYSE:): The 23-month MA is 244-now resistance 228 support.
- iShares Biotechnology ETF (NASDAQ:): Sideways action 130-139 range.
- S&P Retail ETF (NYSE:): 78.00, the 23-month MA resistance, and nearest support 68.00.
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