Last week, I was listening to an analyst talking about small caps. He basically poo-poo'd their importance and therefore influence on the overall market conditions.
Now, this is our Granddad Russell (IWM) -- the representative of stuff made in the USA.
He went on to say that IWM is not a good barometer, rather, we should be looking at the S&P 600. The index looks almost identical to IWM on the chart.
Be that as it may, Gramps does not live in the Economic Modern Family by himself. To be sure, Sister Semiconductors (SMH) lives there. So does Regional Banks (KRE).
While SMH is well above its 23-month moving average, IWM is not. Nor is the Russell 2000 (IWM), shown to you over the weekend. And neither are Granny Retail (XRT) or Transportation (IYT).
Go ahead and make a case for small caps-but supply and demand as measured by these 2 essential family members? You have got to pay attention.
The 23-month moving average (blue) in both XRT and IYT remain elusive. Granted, Transportation (IYT) is closer, while Granny (XRT) just got a pass holding the 80-month MA (green). But now we have 2 pieces of evidence to add to our small caps.
ALL 3 ETFs by the way, directly correlated with the US economy.
This week, with CPI, PPI, Retail Sales and FOMC, watch our trio or what Stanley Druckenmiller once called the "inside" sectors of the US economy. We get through the 23-month MA in IYT, that's great. We start to rollover, not so great. If XRT keeps up at the very least, great. If she rolls over and fails the 80-month, really really not so great.
Signs from the Family never fail to signal the next big moves in the market.
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June 13: Daily Briefing on Real Vision
June 14: CMC Live Trading in London 1:30 ET
June 22: Forex Premarket Show with Dale Pinkert
June 23: Your Daily Five on StockCharts TV
- S&P 500 (SPY): We took out the August 2022 high 431.73 -- now must hold.
- Russell 2000 (IWM): 180 -- now must hold while still miles from its 23-month MA of 193.
- Dow (DIA): 23-month MA 337 cleared, 340 next big level.
- Nasdaq (QQQ): Do we hear 370?
- Regional Banks (KRE): Red today and yet holding, 42.00 now support.
- Semiconductors (SMH): 151.71; if clears probably means another leg higher.
- Transportation (IYT): 237 area the 23-month moving average.
- Biotechnology (IBB): 121-135 range.
- Retail (XRT): 60 now support and 63 resistance.
Director of Trading Research and Education