Mish’s Daily: Analysts are Bearish while Risk On Explodes!
Written by Michele ‘Mish’ Schneider
The four ratio indicators track key intermarket relationships which identify risk on/off market conditions.
These four indicators can be used together to confirm or identify the strength of the core risk on/off indicator which is the S&P 500 v. Utilities.
These charts come from our Big View product, which is superior in assessing market internals, sentiment, sector and world views, picks and pans plus the health of the Economic Modern Family.
As clearly illustrated, all the ratios are flashing 100% risk on.
Is it time to put your cash to work?
The bottom of the recent trading range appears to be holding at this point.
And, what led to more confidence in our recent picks (USO, LIT, GME, 3 most recent examples) was the ratio between SPY and Long Bonds (TLT).
I have been vocal on media about junk bonds (HYG) versus long bonds (TLT). When high yield outperforms long bonds, it is hard to make a case for recession.
Furthermore, we have mentioned that gold appeared to be in for a rest.
As you can see, SPY and WOOD are both outperforming gold-a good thing for the stock market.
These ratios gave us a comfort level as bulls want SPY in the lead.
However, let us not lose sight of the ratios for first, they could flip.
Secondly, the trading range is still very much so a trading range.
Finally, the small caps (IWM) may have gotten a pass for now, but still need to prove a lot more.
In fact, we continue to believe that the economy may not contract further, which is still quite different than predicting the economy can grow. Stagflation is still a thing.
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
Business First AM Retail 05-16-23
Business First Am GME 05-10-23
Business First AM 05-09-23
Daily Briefing Real Vision 05-09-23
May 18th Presentation for Orios VC Fund, India
May 19th Real Vision Analysis
May 22nd TD Ameritrade
May 31st Singapore Radio with Kai Ting 6:05 PM ET MoneyFM 89.3
June 2nd Yahoo Finance
S&P 500 (SPY) 23-month MA 420 Support 410
Russell 2000 (IWM) 170 support – 180 resistance
Dow (DIA) 336 the 23-month MA
Nasdaq (QQQ) 328 cleared or the 23-mont MA-now its all about staying above
Regional banks (KRE) 42 now pivotal resistance-37 support
Semiconductors (SMH) 23-month MA at 124 now more in the rear view mirror
Transportation (IYT) 202-240 biggest range to watch
Biotechnology (IBB) 121-135 range to watch from monthly charts
Retail (XRT) 59.74 held so now we watch the 50-DMA at 62.00