The 23-month moving average or a 2-year business cycle-is particularly important this year after a big up then down year-looms large.
Looking at Granny Retail, that business cycle not only leaves investors with the trading range resistance, it also shows how the Retail sector could be a harbinger of worse times this spring.
On the weekly chart though, the Retail Sector (XET) is still in the game holding both the 50 and 200 week moving averages.
The Real Motion indicator flashes a divergence, however. Momentum weakens while price is ok.
And the Triple Play indicator has Granny underperforming the benchmark.
So, the ever-important representative of US growth is stressed-albeit not broken.
Regional Banks or our Prodigal Son has a story as well.
As per the weekend Daily on the Economic Modern Fam, “Regional Banks (KRE) sit below the 50-WMA and noteworthy, below the 50-DMA. With folks not depositing money due to high credit card debt (AND HIGHER YIELDING OPTIONs LIKE T-BILLS), and with mortgage rates so high, it is no wonder our Prodigal Son struggles?”
The higher rates on T-Bills, CDs and other bank deposits have been attractive for consumers and businesses.
However, that is costly for the US banking industry, already experiencing a slowdown in lending.
With banks having to raise the rates for deposits, bank profits could fall.
And as we know, the Regional Banks character is called Prodigal Son for this very reason-first they (banks) hoard your capital and pay you very little interest, and then they come back asking for forgiveness.
In this case, should banks start to project larger unemployment and smaller profits, that could be the reason Fed either does a pivot or pause, or raises the inflation target from 2% up to 3%.
But we are getting ahead of ourselves.
Granny Retail and Prodigal Regional Banks are my key go to’s for this week. Teetering on support, they could be just fine, and low risk buy opportunities. BUT, if they fail support, take note!
Stock Market ETFs Trading Analysis & Summary:
S&P 500 (SPY) 390 support with 405 pivotal 410 resistance
Russell 2000 (IWM) 190 failed so Grandpa hurts-295 support
Dow (DIA) 326 support 335 resistance
Nasdaq (QQQ) 284 big support 300 pivotal 305 resistance
Regional banks (KRE) 60 pivotal f-closed below
Semiconductors (SMH) 240 pivotal 248 key resistance
Transportation (IYT) 240 resistance and 230 support
Biotechnology (IBB) 125-135 trading range
Retail (XRT) 66 pivotal with 64 key support
The author may have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.