Mish’s Daily: Is Higher For Longer So Bad For Investors?
Mish’s Daily: Is Higher For Longer So Bad For Investors?
Written by Michele ‘Mish’ Schneider
We woke up Friday morning to a huge surprise with the jobs report coming out much stronger than expected.
As the Federal Reserve looks closely at this number to help determine monetary policy, the initial reaction was fear of higher for longer interest rates.
However, as per an interview early Friday I did on Benzinga Morning Prep, is that really bad for the market in the long run?
The parabolic moves in Amazon and Meta have little to do with the overall economy if one looks at the big picture.
Nonetheless, both flew after earnings, and both helped widen the divide between small caps and growth stocks. Plus, the risk gauges have flashed more risk off this past week.
Note the long bonds TLT versus the SPY and HYG. In a risk on environment, TLT should be underperforming both.
This chart does not reflect Friday’s action, which did see SPY improve and TLT decline, which could mean more risk neutral.
The point is, aside from the few crazy stocks, the market breadth was not great.
Yet, Granddad Russell 2000 IWM and Granny Retail XRT are telling their own stories, which should not be ignored.
Looking at the Daily chart of IWM, we can determine a lot from the price, but also from our ACP plug-ins, featured on our website as well as on Stockcharts.com.
The price is above the 50-DMA so the bullish phase is intact. Plus, Friday was an inside day to Thursdays’ range.
The calendar range tells us that IWM can go either way. Below the January lows spells trouble, above the highs very bullish.
The Leadership has a story to tell in that it is well underperforming the SPY, which we know is unsustainable. Either SPY begins to fall or IWM must play some catch up.
Momentum or Real Motion tells us that there is no real diversion between momentum and price. We can say, IWM is lying in wait.
Granny Retail XRT looks better.
On a monthly chart, this year was banner for XRT in that it took out a 23-month moving average or went into an expansion period.
Since December, January and so far in very early February, XRT is having 2 inside months to December’s large range.
So if we step back, a move over 72.94 should be the start of something much bigger.
In the meantime, the January calendar range high remains elusive, while XRT holds well above the January calendar range low.
XRT also underperforms SPY. And momentum, like IWM’s, lies in wait, looking ok, but not showing any divergence to price.
Is Higher-For-Longer So Bad for Investors? If normalization is reached in that inflation and fed fund rates remain aligned and the public gets used to a historically viable interest rate of 5.5%, the answer is that adaptive investors will find great opportunities.
For more detailed trading information about our blended models, tools, and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
Come to the Money Show to hear me and many other great folks speak.
Get your copy of “Plant Your Money Tree: A Guide to Growing Your Wealth”
Grow Your Wealth Today and Plant Your Money Tree!
“I grew my money tree and so can you!”- Mish Schneider
Mish in the Media
Benzinga Morning Pre Market Mish sits with the team to discuss the recent job report and how a healthy economy is not the worst thing. It just means a reset of how investors invest 02-02-24
CNA Asia First Mish’s debut talking the Fed, inflation, big tech earnings and what investors should look out for 01-31-24
Money FM 89.3 Singapore Mish on breakfast bites talking earnings and interest rates-plus her made up ETF 01-31-24
Business First AM Mish talks briefly about oil and how we will know when geopolitics are heating up 01-30-24
CMC Markets Mish covers how to trade the earnings report on the stocks that reported plus key commodities 01-31-24
Kitco News An Article with Neils Christensen on the direction for gold 01-30-24
Business First AM Mish covers how important small caps are and why she likes 2 different industrial metals 01-30-24
Yahoo Finance 33 Charts for 2024 -Article
Stockpick Jillian Glickman and Mish discuss economic outlook and current investment picks plus forecasts on inflation. 01-22-24
Dale Pinkert FXTrader Mish and Dale discuss the equities and futures marklets and how she and MarketGauge are positioned right now 01-25-24
Yahoo Finance Mish makes up a new ETF (not real) called VAIN-but really discusses the basket of stocks that are worth watching 01-24-24
Against All Odds Jason Perz Podcast-The mental game of trading, commodities, futures, equities, technical analysis, macro-we cover it all 01-16-24
StockchartsTV How Calendar Ranges can Predict Market Direction-Mish and Geoff cover how this indicator tells you who and what to believe, when to act and what to trade 01-16-24
Coming Up:
February 5 Money Show Life with Chuck Jaffe
February 21-23 The Money Show in Las Vegas
February 26 CNA Asia First TV and Radio
February 29 Yahoo Finance
February 29 Your Daily Five Stockcharts
Weekly: Business First AM, CMC Markets
ETF Summary
S&P 500 (SPY) New all time highs which makes 490 support
Russell 2000 (IWM) 195 pivotal, 190 support to hold
Dow (DIA) New all time highs making 385 support to hold
Nasdaq (QQQ) Close to new all time highs making 425 support to hold
Regional banks (KRE) 50 now resistance to clear
Semiconductors (SMH) 184 support
Transportation (IYT) 262 now support again-plus this looks ready to climb higher which will help XRT and IWM
Biotechnology (IBB) 135 pivotal
Retail (XRT) 70 pivotal with 73 and up a breakout if gets there
20240203
