Markets Resilient, but With a Touch of Pessimism

05/09/2023

2 minutes read

2023.05.09 04:42

After the market has absorbed bank crises, debt ceiling talk, the Fed Funds rate at 5.25%, earnings misses and beats, calls for recession and hopes for lower inflation, we have plenty more to say.

Since I will be joining Maggie Lake and the folks at Real Vision at 4 PM ET (you can find it on their channel on YouTube), I thought sharing my notes in preparation for that would be a good comeback for my Daily writing.

SPY-Daily & Weekly Chart

The charts show 2 different timeframes.

The first is the daily chart.

SPDR® S&P 500 (NYSE:) is in a daily bullish phase. The price is not too far from the early May peak, which sits just under the 23-month moving average or 2-year business cycle.

The Real Motion indicator illustrates no real divergence as that, too, is in a bullish phase.

On the weekly charts, SPY is also in a bullish phase above both the 50 and 200-WMAs. Momentum here has a divergence.

SPY momentum sits on the 50-WMA which sits beneath the 200-WMA or in a recuperation phase.

What do these charts suggest?

Based on this “Would you sell in May, and go away?”

Market resiliency with just a touch of pessimism.

Some areas to watch:

SPDR® S&P Regional Banking ETF (NYSE:) or Regional Banks-if the price holds 37.05 then it is possible the worst is over. If that level fails, expect more bad news.

The Economic Modern Family-regardless of what SPY is doing, the (IWM) needs to hang in there and clear 180. Granny Retail XRT, must hold 60.

Transportation IYT is a bright spot and if clears 230-the case for more upside is clearer.

Inflation-basic materials lag, but industrial metals particularly ($3.93), played catch up.

Precious metals (gold $2028 Silver $25.70) continue to outperform. With CPI PPI this week, we will know a bit more although CORE PCE is still high.

Oil-China consumption rose. rallied to $77.00 per barrel. Above $80 shorts will cover and energy will rebound higher.

102 stocks made new 52-week highs today. Shopify (NYSE:), O’Reilly, Shake Shack (NYSE:), Builders FirstSource are a few.

111 stocks made a new 52-week low. Match.com and Tyson Foods (NYSE:) stood out.

Tech stocks-Apple looks amazing as does Microsoft (NASDAQ:), Nvidia (NASDAQ:). SMH the ETF is over a key monthly MA and could expand.

Dollar-as long as it holds 100.70 neutral.

Some picks:

Live Streaming Sports and Music

Country ETF Vietnam

Biotech stocks

Copper

Our discretionary trading strategy:

Buying instruments close to but holding the longer-term MA,
Shorting instruments that have failed the shorter-term MA
Buying momentum on instruments that are clearing the shorter-term MA.
Keeping all trading light until the SPY clears the shorter-term MA. And when/if SPY does, we will buy but also watch to see if small caps (IWM) can get close to its MA at 200.

My prediction-SPY QQQs DIA continue to rally until IWM cannot clear $200-then everything sells off again.