All in all, the key sectors (retail, transportation) have more to prove, especially by clearing the 23-month moving average or 2-year business cycle. This is a significant level, as these sectors proved recession was held off when they both held the 80-month moving average or their 6-7 year business cycle low.

So if, after 2021 was a huge up year and 2022 was a huge down year, 2023, SPX clears a 2 year cycle, it looks way better for the economy and market. If SPX cannot clear, we are back to predictions that SPX can fall as low as 3200. And stagflation predominates.

To date, there has been incredible resilience in the market indices. All the indices are in a trading range. SPX 4200 is the key resistance. 4100 is pivotal (above bias more positive, below bias more negative). And 3900 is the key support.

The chart is of the weekly price action. Particularly striking is not only the 4200 level, but also that we had an inside trading week last week (inside the trading range from the week prior). Furthermore, this week begins within the trading range of last week.

A range within a range means pause. It also means the investors/traders are getting smarter–holding off until the next direction becomes clearer.

Let’s look at more charts.

The CPI tomorrow could shed light on next moves. In the meantime, here is the monthly chart of the retail sector or our very own Granny Retail. Note how the blue line confirms that 2-year business cycle resistance, as if to say we are a bit optimistic about the future growth of the economy and hardiness of the consumer.

Nonetheless, Granny also says not so much, as we can easily get dismayed and break under the green line or (we are in a) recession line.

Of course if Granny is hesitating, the Transportation sector is as well.

Looking a bit more positive than consumerism, transportation, or the movement of goods and services, certainly defies recession. However, IYT sits between the 23-month and 80-month moving averages as well. Most of the family charts in fact, look the same. As if we are this close to a new leg higher, or a major disappointment for the bulls. 

Interesting to follow right now is how our MarketGauge’s  GEMS Model is positioned. GEMS has broad exposure to sectors, regions, bonds, indicies, and global macro assets.

The top ranked ETF using our Trend Strength Indicator (TSI, a measure of momentum using our proprietary software) is the Europe Index (VGK). However, that too sits right below its 2-year business cycle or 23-month moving average. It seems, pretty much everywhere we look, the market is paused waiting to see what happens next with inflation.

Please read the weekend update, as we believe the real pause is in inflation. And we see no reason to believe that central banks of governments are close to having it under control.

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

Mish gives you some ideas of what might outperform in this new wave of inflation on the Friday, February 10 edition of StockCharts TV’s Your Daily Five. She has picks from energy, construction, gold, defense, and raw materials.

Read about Mish’s interview with Neils Christensen in this article from Kitco!

In this appearance on Making Money with Charles Payne, Charles and Mish discuss whether Powell can say mission accomplished.

Mish shares her views on how to approach the earnings announcements of Apple, Amazon, and Alphabet, and gives her technical outlook on how the earnings results could impact the S&P 500 and Nasdaq 100 in this appearance on CMC Markets.

Listen to Mish on Chuck Jaffe’s Money Life, beginning around the 27-minute mark.

Kristin and Mish discuss whether or not the market has run out of good news in this appearance on Cheddar TV.

Harry Melandri and Mish discuss inflation, the Federal Reserve, and all the sparkplugs that could ignite on Real Vision.

Jon and Mish discuss how the market (still rangebound) is counting on a dovish Fed in this appearance on BNN Bloomberg.

Mish discusses price and what indices must do now in this appearance on Making Money with Charles Payne.

In this appearance on TheStreet.com, Mish and JD Durkin discuss the latest market earnings, data, inflation, the Fed and where to put your money.

In this appearance on CMC Markets, Mish digs into her favourite commodity trades for the week and gives her technical take on where the trading opportunities for Gold, oil, copper, silver and sugar are.

ETF Summary

S&P 500 (SPY): 420 resistance with 390-400 support.Russell 2000 (IWM): 190 pivotal support and 202 major resistance.Dow (DIA): 343.50 resistance, 338 support.Nasdaq (QQQ): 300 the pivotal area, 290 major support.Regional Banks (KRE): 65.00 resistance, 61 support.Semiconductors (SMH): 248 resistance, 237 then 229 support.Transportation (IYT): The 23-month MA is 244–now resistance 228 support.Biotechnology (IBB): Sideways action 130-139 range.Retail (XRT): 78.00 the 23-month MA resistance and nearest support 68.00.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education