What we heard from the Fed and FOMC on Wednesday:
Unanimous Holding rates allows FOMC to assess additional data Tighter credit likely to weigh on activity 2023 unemployment seen At 4.1% vs. 4.5% Median rate forecasts rise to 5.6% end-`23, 4.6% end-`24Extent of additional firming to hinge on economy
Nothing in here is a surprise to us, as we have been talking on all the media about the expected pause (skip) this month. And that the Fed would leave the door open for further rate hikes depending on… the DATA.
Plus, the PPI decreased for 11 months in a row. As a chartist, (and logical human who buys things), I’d say we won’t see these lows again in the PPI until 2024.
We love to watch the Long Bonds as they are a key factor in our risk gauges that help us see risk on/off. But what might the Long Bonds be telling us?
Back in early March, TLTs had a classic island bottom. If you do not know what that is, that’s a gap down after a downtrend, which is next followed by consolidation, then a gap up.
The island bottom pattern suggests that buyers have regained control. And we always preach that it’s a good idea to combine technical analysis with fundamental analysis and consider other factors that may impact price. For us, it is the TLT chart, and the IWM or small cap chart, that may be telling both a fundamental and technical story.
And please note, we remain very open-minded.
The TLT chart and the momentum indicator Real Motion have us on the alert for a bullish divergence signal. That means that the red dots can clear the 50-day moving average (blue line) while we wait for price to follow or not. The Triple Play indicator tells us that risk-on remains while TLTs continue to underperform the market or benchmark. We’ll wait to see if that changes as well. Besides that, the Russell 2000 (IWM) on the monthly chart is right at resistance at the 23-month moving average.
The market is at an incredible inflection point. If the TLTs rally from here, we expect that IWM will not be able to clear the blue line. If TLTs fall from here, we still need to see IWM cross over into expansion. Plus, we are watching the retail and transportation sectors (XRT IYT) carefully. It’s not just about small-caps, as you can see in our recent article here.
If the bonds continue to consolidate around current levels, then we will assume a trading range at these higher levels (SPY 410-440) for now, until the next round of the… DATA.
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Mish in the Media
Ahead of the Fed’s announcement, Mish shares her take on major currency pairs, starting with EUR/USD, in this appearance on CMC Markets.
Mish joins Ash Bennington to discuss the market’s response to today’s inflation data, the AI-powered tech rally, whether we’re seeing signs of exhaustion in equities ahead of the Fed announcement on Real Vision.
Mish explains how the Russell 2000 is the canary in a coal mine on Business First AM.
Mish offers her technical forecasts for gold, EUR/USD, USD/JPY and WTI Crude Oil ahead of today’s CPI report on CMC Markets.
Mish Schneider and TG Watkins continue their chat about the business of trading in this video from StockCharts TV. Topics range from their work/home life balance, how being a consumer does or does not play into their trading decisions, and what they do in their free time to unwind.
Mish and Nicole Petallides go over rates, key sectors and the economy in this video from TD Ameritrade. They also discuss what raw materials are coming into vogue.
Mish and Jon talk about what could make markets continue or reverse and what to buy right now on BNN Bloomberg’s Opening Bell.
Mish and Charles talk inflation fears, the “wall of worry” and trading large-caps on Fox Business’ Making Money with Charles Payne.
The first 5 months of 2023 have been rallying on optimism going forward. Will that continue for the next few months? Mish digs into that question in this Twitter Spaces conversation with Wolf Financial.
Mish discusses impacts of weather, labor market and the FED on tap on Fox Business’ Coast to Coast with Neil Cavuto.
The US dollar rallied following a positive US jobs report last Friday, but could the Federal Reserve’s upcoming interest rate decision halt the greenback’s rise? Mish offers her views on USD/JPY, the S&P 500, and light crude oil futures on CMC Markets.
Mish talks GME (Gamestop) and more on Business First AM.
Where is the US economy actually heading? Rajeev Suri of Orios discusses this question and what trends suggest with Mish in this video.
Coming Up:
June 15-16: Mario Nawfal ETSpaces, 8am ET
June 22: Forex Premarket Show with Dale Pinkert
June 23: Your Daily Five on StockCharts TV
ETF Summary
S&P 500 (SPY): 440 target still.Russell 2000 (IWM): 23-month MA of 193 still a bit away.Dow (DIA): 34,000 in the Dow — thinking next 6-months not as pretty.Nasdaq (QQQ): 370 max target.Regional Banks (KRE): 42 support, 44 pivotal.Semiconductors (SMH): 150 now major support. Lots of models took profits into this run.Transportation (IYT): 237 area the 23-month moving average — this must hold.Biotechnology (IBB): 121-135 range.Retail (XRT): Failed to hold the 200-DMA at 62.95.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education