This week, we have featured the 23-month moving average, or 2-year business cycle, and its significance to the indices.
In particular, when speaking about the S&P 500, we wrote:
- There was a bullish run in 2021 based on easy money.
- Inflation ran hotter than most expected.
- The Central banks were caught off guard…and by 2022, the party was over.
So, that really begs the question of why is this year’s 23-month moving average one of the most important indicators for equities.
Now, what about for gold? Anybody who has followed us, and particularly Mish, knows how bullish we are in the metal. And, after hearing the State of the Union Address Tuesday night, we are even more bullish now. Those thoughts will be published over the weekend as an addendum to the 2023 Outlook.
Let’s look at the monthly chart of gold. The charts of the SPY and the Russell 2000 (IWM) both showed how they stopped rallying right under the 23-month MA. That could change, of course. Gold on the other hand, is above the 23-month MA and the 2 year business cycle. It cleared the major moving average in December, saw follow through in January 2023, and, thus far in February, is holding the gains. In fact, should gold get closer to around 168-170, that would look like a low risk buy opportunity.
If SPY and IWM cannot clear their 2-year cycles, while gold already has–watch the charts. They tell you everything.
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- S&P 500 (SPY): 420 resistance, with 390-400 support.
- Russell 2000 (IWM): 190 now support and 202 major resistance.
- Dow (DIA): 343.50 resistance and the 6-month calendar range high.
- Nasdaq (QQQ): 300 is now the pivotal area.
- Regional Banks (KRE): 65.00 resistance.
- Semiconductors (SMH): 248 is the 23-month moving average–key.
- Transportation (IYT): The 23-month MA is 244–now resistance.
- Biotechnology (IBB): Sideways action.
- Retail (XRT): 78.00 the 23-month MA resistance, and nearest support 68.00.
Director of Trading Research and Education
Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision.