Mish’s Daily: The Power of the 23-Month Moving Average

4 months ago 195 views 4 min read

Michele “Mish” Schneider

Director of Trading and Education

MarketGauge.com

Mish’s Daily: The Power of the 23-Month Moving Average

Written by Michele ‘Mish’ Schneider

Today we have another look at the 23-month moving averages.

The first one for context is of the S&P 500 (SPY).

SPY cleared the 23-month in 2023.

SPY tested the 23-month moving average after the breakout in October 2023.

SPY closed today on new all-time highs.

One could say that SPY entered an expansion phase last year and is, well, still expanding.

In contrast, the next chart is of Alibaba and its 23-month moving average.

We know that if the price clears that MA, then we will assume that the stock has more room to run with a now 2-year business cycle expansion.

Nonetheless, the stock fell after earnings and now we use the support level of $77-80 to gauge the company’s health.

In 2023, KRE was the first sector in the Family to signal a warning in March.

That is when SPY fell to test its 23-month and held it, telling us that the bank debacle while a bit destabilizing, was not a buy opportunity against major support.

Presently, the 23-month MA sits at $51.30.

Today it traded to a high of 51.75, settling at 51.04 or just below the 23-month MA.

Hence, while KRE has been in contraction really since 2022, it now stands a chance of going into expansion.

We are not there yet, but keep your eyes on

1. KRE holding $49-50.
2. KRE closing the month over the 23-month MA and staying above there for a great low risk trade opportunity.

Educational purposes only, not official trading advice.

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