Mish’s Daily: Technical Correction or Return of the Bear Market?
Mish’s Daily: Technical Correction or Return of the Bear Market?
Written by Michele ‘Mish’ Schneider
On July 5th, Mish wrote an article called Sell in July and Go Away? Calendar Range Reset.
One quote from the article, “.should IWM fail to clear the calendar range high and worse, break down under a new 6-month calendar range low, then it would be hard to think NASDAQ sustains current levels.”
July 19th so far, marks the top of the market.
Yesterday we featured the retail sector through the ETF XRT.
This sector represents the major shopping habits of Americans or 68% of the GDP.
One could argue that despite the headwinds, the consumer is holding up.
And one could also argue that while true, for how long can that go on?
In asking those questions, we also examined the charts.
Conclusion-XRT, while significantly underperforming the benchmark, has yet to convincingly break down, or breakout for that matter.
The small caps through the ETF IWM are performing better than XRT.
However, while IWM is well below the July 6-month calendar range high, it remains well above the calendar range low at 180.72.
In other words, we are still in correction mode rather than bear market mode.
Retail can sour the markets more of course.
And growth, which has outperformed value, exemplifies the weaker retail sector yet stronger tech sector.
Nonetheless, today we turn our attention to Nasdaq to see if this has indeed seen the best of the rally and is poised for lower levels.
With Tesla, Nvidia and Apple all down between 2-4% in today’s session, QQQs are approaching a huge support area.
The QQQ chart right now has a few key aspects based on our MarketGauge proprietary indicators.
- 1. The Phase-Bullish as the 50 DMA is above (blue) the 200-DMA (green) while the price trades above both MAs
- 2. Fast MA-with today’s action, QQQs is holding the MA (pink). Interesting that the fast MA is in alignment with the 50-DMA
Calendar Ranges-QQQ could not clear above the July 6-month calendar range high (horizontal green line). However, it is well above the July 6-month calendar range low (red line).
- 3. Real Motion-QQQs momentum is weakening and shows a bearish divergence sitting under the 50-DMA while price remains above its 50-DMA
- 4. Leadership- QQQ has outperformed the SPY since late August although it is failing the dotted Bollinger Band.
Put this all together and we have solid reasons why growth is supreme over value.
We also have some palpable resistance at the July 6-month calendar range highs that until clears, means with the weaker momentum, the possibility QQQs could test the July calendar range low.
The best we can say now is this is a technical correction.
It certainly could turn into more downside, especially if the retail and small caps fall much further.
Likewise, if this is merely a correction, then we ought to see a better bounce from current levels very soon.
Until either scenario plays out, QQQs are rangebound.
If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at Benny@MGAMLLC.com, our Head of Institutional Sales. Cell 612-518-2482
For more detailed trading information about our blended models, tools, and
trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.
You don’t want to miss Mish’s 2023 Market Outlook E-available now
NOT TOO LATE Click here if you’d like a complimentary copy of Mish’s 2023 Market Outlook E-Book in your inbox.
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
CMC Markets Daytrading Oil, Gas, Gold, Silver, Dollar Pairs 09-06-23
Business First AM Worst Trade Best Trade 09-05-23
Business First Am Reasons to be Cheerful 08-29-23
Money Life with Chuck Jaffe 08-29-23
Guest Host Final Bar Stockcharts 08-28-23
Making Money with Charles Payne Fox Business 08-28-23
Yahoo Finance Pre Market 08-28-23
Business First AM DBA 08-23-23
Business First AM Nvda 08-22-23
Coming Up:
September 7 Singapore Breakfast Radio 89.3 FM
September 7 Wolf Financial Spaces
September 7 CNBC Asia
September 12 BNN Bloomberg
September 12 Charting Forward StockchartsTV
September 13 Investing with IBD Podcast
October 29-31 The Money Show
ETF Summary
S&P 500 (SPY) 440 support 458 resistance
Russell 2000 (IWM) 185 pivotal 190 has to clear
Dow (DIA) 347 pivotal
Nasdaq (QQQ) 363 support and over 375 looks better
Regional banks (KRE) Another modern family member struggling here under 44
Semiconductors (SMH) 150-161 range to watch
Transportation (IYT) Broke the calendar range low along with XRT-not so healthy
Biotechnology (IBB) Compression between 124-130
Retail (XRT) 62.90 the July calendar range low broke down-along with IYT-2 negative signs
20230907