In this episode of StockCharts TV‘s The MEM Edge, Mary Ellen reviews areas of the market that are bucking the downtrend pressure elsewhere, as those often go on to provide leadership once the markets turn. She also shares how to use ETFs to uncover rotation taking place beneath the surface.

This video originally premiered September 29, 2023. Click on the above image to watch on our dedicated MEM Edge page on StockCharts TV, or click this link to watch on YouTube.

New episodes of The MEM Edge premiere weekly on Fridays. You can view all previously recorded episodes at this link. You can also receive a 4-week free trial of her MEM Edge Report by clicking the image below.

The internals have all cycled to extreme low areas, which tells TG that being short would be risky — just like being super long at the end of July was also risky. The pendulum has swung to the lows, and now, in this week’s edition of Moxie Indicator Minutes, TG explains why you should start looking for strength if it presents itself.

This video was originally broadcast on September 29, 2023. Click this link to watch on YouTube.

New episodes of Moxie Indicator Minutes premiere weekly on Fridays. Archived episodes of the show are available at this link.

In this edition of the GoNoGo Charts show, Tyler and Alex walk through a top-down approach to the markets and see that there are plenty of reasons why equities are struggling. Treasury rates and the Dollar are in strong “Go” moves and breaking out. The trend was strong this week, as we see equities painting purple “NoGo” bars. What is worrying many investors is the idea that the large tech stocks are helping stem the “NoGo” tide; if they rollover as well, that could mean trouble. Charts of META, GOOGL, etc. are discussed.

This video originally premiered on September 29, 2023. Click this link to watch on YouTube.

Learn more about the GoNoGo ACP plug-in with the FREE starter plug-in or the full featured plug-in pack.

On this week’s edition of StockCharts TV‘s StockCharts in Focus, Grayson talks all about ChartPacks — the QUICKEST and EASIEST way to enhance your StockCharts account (old or new) in just one click! ChartPacks are pre-created collections of ChartLists that you can install right into your account; Grayson will be taking a special look at Dave Keller’s Morning Routine chart pack and show us how to put Dave’s charts right into your own account.

This video originally premiered on September 29, 2023. Click on the above image to watch on our dedicated StockCharts in Focus page on StockCharts TV, or click this link to watch on YouTube.

You can view all previously recorded episodes of StockCharts in Focus at this link.

In this edition of StockCharts TV‘s The Final Bar, Dave answers viewer questions about Tesla’s potential trajectory towards the 200-day moving average and ways to normalize relative strength graphs using volatility measures. He also dives into his past trades’ technical setup, shares tips for setting up intraday trading charts, and much more!

This video originally premiered on September 29, 2023. Watch on our dedicated Final Bar page on StockCharts TV, or click this link to watch on YouTube.

New episodes of The Final Bar premiere every weekday afternoon LIVE at 4pm ET. You can view all previously recorded episodes at this link.

We do not want to walk down the political aisle. Nonetheless, what person can turn their heads away from the Sunday deadline on funding the government?

The aftermath of a shutdown will most likely include a credit downgrade for the US. Do Americans need another reason to distrust the politicos?

With a 90% consensus that the funding will not pass, the bounce we saw in equities last week could be short-lived.

The Retail ETF XRT had a technically perfect mean reversion in momentum and a classic glass bottom reversal. Coming into Friday, 3 of our risk gauges said risk neutral. That gave us hope that our Granny Retail could lead us out of harm’s way. And, on the heels of Nike earnings, she kinda did.

However, will a bounce in the consumer sector help keep the risk gauges neutral? For that answer, we turn to another old reliable friend, high yield, high debt junk bonds.

These bonds are a key influencer for risk; after all, how bad can things be if companies with junk ratings are being bought for their higher-paying yield? That is a big risk-on factor.

We also look at their performance relative to the long bonds (TLT). Even though neutral can turn to risk-off, any hope from bond traders and/or the retail sector could also see risk-neutral turn to risk-on. We can hope, right?

The chart of HYG has several fascinating and a somewhat taming influence on the extreme negativity. For starters, HYG held its ground on Friday as the indices turned red. (So did XRT, by the way.) Secondly, HYG returned over the July 6-month calendar range low (red horizontal line). Thirdly, HYG held the March lows made after the mini-banking crisis. Fourth, HYG had a mean reversion buy in our Real Motion momentum indicator.

Fifth, and here is the risk gauge ratio, HYG is strongly outperforming the TLT (Leadership indicator). That is what bulls need to continue to see. Conversely, bulls do not want to see HYG fail the March lows. Nor do they want to see XRT take out last week’s lows. Furthermore, they do not want to see TLT catch a bid in fear of an oncoming recession while junk bonds underperform.

We like it when we can simplify the narrative. Junk bonds help us to accomplish that.

This is for educational purposes only. Trading comes with risk.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

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.

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish in the Media

See Mish argus investors could jump into mega-tech over value and explain why she is keeping an eye on WTI prices on BNN Bloomberg’s Opening Bell.

Even as markets crumble, there are yet market opportunities to be found, as Mish discusses on Business First AM here.

Mish explains how she’s preparing for the next move in Equities and Commodities in this video with Benzinga’s team.

Mish talks about the head-and-shoulders top pattern for the S&P 500 in The Final Bar.

Mish covers sectors from the Economic Family, oil, and risk in this Yahoo! Finance video.

Mish shares why the most important ETFs to watch are Retailers (XRT) and Small Caps (IWM) in this appearance on the Thursday, September 20 edition of StockCharts TV’s The Final Bar with David Keller, and also explains MarketGauge’s latest plugin on the StockCharts ACP platform. Mish’s interview begins at 19:53.

Mish covers 7 stocks that are ripe for the picking on the Wednesday, September 20 edition of StockCharts TV’s Your Daily Five, and she gives you actionable levels to watch.

Take a look at this analysis of StockCharts.com’s Charting Forward from Jayanthi Gopalkrishnan, which breaks down Mish’s conversation with three other charting experts about the state of the market in Q3 and beyond.

Mish was interviewed by Kitco News for the article “Oil Prices Hit Nearly One-Year High as it Marches Towards $100”, available to read here.

Mish covers short term trading in DAX, OIL, NASDAQ, GOLD, and GAS in this second part of her appearance on CMC Markets.

Mish talks Coinbase in this video from Business First AM!

Mish looks at some sectors from the economic family, oil, and risk in this appearance on Yahoo Finance!

Mish covers oil, gold, gas and the dollar in this CMC Markets video.

In this appearance on Business First AM, Mish explains why she’s recommending TEVA, an Israeli pharmaceutical company outperforming the market-action plan.

As the stock market tries to shake off a slow summer, Mish joins Investing with IBD to explain how she avoids analysis paralysis using the six market phases and the economic modern family. This edition of the podcast takes a look at the warnings, the pockets of strength, and how to see the bigger picture.

Mish was the special guest in this edition of Traders Edge, hosted by Jim Iuorio and Bobby Iaccino!

In this Q3 edition of StockCharts TV’s Charting Forward 2023, Mish joins a panel run by David Keller and featuring Julius de Kempenaer (RRG Research & StockCharts.com) and Tom Bowley (EarningsBeats). In this unstructured conversation, the group shares notes and charts to highlight what they see as important considerations in today’s market environment.

Coming Up:

October 2: Schwab, The Watch List 

October 4: Jim Puplava, Financial Sense

October 5: Yahoo! Finance

October 12: Dale Pinkert, F.A.C.E.

October 26: Schwab at the NYSE

October 27: Live in-studio with Charles Payne, Fox Business

October 29-31: The Money Show

Weekly: Business First AM, CMC Markets

ETF Summary

S&P 500 (SPY): There are multiple timeframe support levels round 420-415.Russell 2000 (IWM): 170 huge.Dow (DIA): 334 pivotal.Nasdaq (QQQ): 330 possible if can’t get back above 365.Regional banks (KRE): 39.80 the July calendar range low.Semiconductors (SMH): 133 the 200-DMA with 147 pivotal resistance.Transportation (IYT): Could be another bright spot if clears 237. 225 support.Biotechnology (IBB): 120-125 range.Retail (XRT): 57 key support; if can climb over 63, get bullish.

Mish Schneider

MarketGauge.com

Director of Trading Research and Education

As Q3 and a dismal September end, some interesting dynamics are playing out in the stock market.

You can blame higher interest rates for some of the disjuncture that’s going on. The CBOE Volatility Index ($VIX) is relatively low, yet the percentage of stocks trading below their 50-, 100-, and 200-day moving averages is relatively low. Here’s the market in a nutshell:

The Dow Jones Industrial Average ($INDU) is trading below its 200-day moving average. The S&P 500 ($SPX) is trading below its 100-day moving average.The Nasdaq Composite ($COMPQ) is trading below its 100-day moving average. The CBOE Volatility Index ($VIX) is relatively low, at less than 18.Year to date, Communication Services, Technology, and Consumer Discretionary are the three leading sectors. 

We saw a similar scenario unfold in 2005, but there are stark differences between then and now. In 2005, Energy was the leading sector for the year, with Utilities in second place. Communication Services and Consumer Discretionary were the two sectors in negative territory.

The Big Picture

Although history is known to repeat itself, each time, it’s still somewhat different. This year, investors are uncertain about inflation and interest rates. Plus, there is the possibility of a US government shutdown that could weave its way into the stock market. As Q3 ends and we gear up for Q4, it’s important to have the bigger picture in mind.

Let’s start with market breadth.

The chart below gives a good picture of the overall market breadth. The NYSE new 52-week highs ($NYHGH) are slowly rising. The new 52-week lows spiked, but they’re slowing down. And if you look at the high/low ratio, it’s pretty flat.

CHART 1: S&P 500 AND MARKET BREADTH. If there was one word to sum up the performance of the stock market, it would be “meh!” There’s not much momentum in either direction.Chart source: StockCharts.com. For educational purposes.

The market seems to be lacking momentum. Sometimes, it looks like it will move up, but sellers come in and cap the move. Similarly, when the market looks like it’s going to sink, buyers prop it up. So what catalyst will move the market in either direction? Will it be earnings, or something else?

The general thinking among Wall Street analysts is that Q4 will see strong earnings, which could be the catalyst the market is waiting for. But, on the flip side, Treasury yields are high. And higher yields haven’t been great for growth stocks.

The chart below shows the relationship between the S&P 500 and the 10-year Treasury Yield Index ($TNX). In the last half of September, the two diverged significantly.

CHART 2: S&P 500 VS. 10-YEAR TREASURY YIELDS. Rising yields generally hurt growth stocks, as is evidenced in this chart. As yields were rising, the S&P 500 was moving lower.Chart source: StockCharts.com. For educational purposes.

Yields have reached levels they haven’t seen since 2007, and let’s hope the market doesn’t perform the way it did in 2007. The circumstances are indeed different this time. We don’t have the high levels of mortgage debt like we did then. There’s a chance that interest rates may be close to a peak, although the Fed could still hike once more this year. So, that may mean yields could stay higher for longer. And it’s the “higher for longer” regime that could be causing hesitancy among investors.

The bigger question is if stocks can perform well while interest rates are high. The dominant seasonality narrative of Q4 being strong could unfold. But if the large mega-cap stocks lead in Q4, could higher interest rates act as headwinds? If they are, it could make for relatively muted growth in Q4. But there’s a chance that other asset classes could dominate. How will the last three months of 2023 shape up?

The Bottom Line

It all depends on what interest rates do. The market could go either way. It could turn around and go higher, or could fall even further before moving higher. Keep an eye on market breadth, because it can reveal what’s brewing underneath the price bars.

End-of-Week Wrap-Up

US equity indexes mixed; volatility up

$SPX down 0.27% at 4288.05, $INDU down 0.47% at 33507.50; $COMPQ up 0.14% at 13219.32$VIX up 1.04% at 17.52Best performing sector for the week: EnergyWorst performing sector for the week: UtilitiesTop 5 Large Cap SCTR stocks: Super Micro Computer (SMCI); Dell Technologies (DELL); Palantir Technologies (PLTR); Splunk Inc. (SPLK); Jabil, Inc. (JBIL).

On the Radar Next Week

September ISM Manufacturing PMIFed speechesISM Services PMISeptember non-farm payrolls

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

One of the not-too-surprising correlations in the financial markets is shown in this week’s chart. There is a strong positive correlation between the dollar price of crude oil and the Canadian dollar-to-US dollar exchange rate. The relationship is not surprising, as Canada is a major oil-producing country, and so, as goes the price of oil, so go the fortune’s of Canada’s currency.

But as we see in this week’s chart, while there is usually a very strong positive correlation, the two do not always agree. The fun point about this is that when they disagree, it is usually the Canadian dollar that ends up being “right” about where both are headed. That is relevant right now because crude oil has rallied since early July from in the $60s to now above $90/barrel, but the Canadian dollar is making a divergent lower high.

I have highlighted several other such divergences, moments when the two plots disagreed about which way to go. In each of these disagreements, one would have been better off listening to the message of the Canadian dollar than listening to the price direction of crude oil.

If that tendency continues, then we should expect at least a small stumble for crude oil prices just ahead, as the oil market realizes it has zigged when its partner zagged, and crude oil works to make up for that overstep. Then again, now that I have pointed out this tendency, this could be the one time that the rule does not work, just because I shared it.