Pablo Picasso is known as the father of cubist painting. He and others used geometric shapes and patterns to represent a specific form.
Cubism, in Picasso’s mind, was created to emphasize the different ways of seeing the world around us. Picasso painted cubes and shapes using the concept of relativity while employing multiple perspectives.
The market in 2023 feels like a cubist painting. The different indices and sectors relate to one another with a similar concept of relativity and multiple perspectives. And, clearly, these multiple perspectives have distorted reality and perception, yet still are recognizable.
Using the Timeframes within Business Cycles: Expansion, Peak, Contraction, Trough
Some sectors/indices are in expansion.
Some sectors/indices are in contraction.
Others are more stagnating or not quite expanding nor contracting.
Nothing appears to have peaked yet, and possibly some areas may have seen their trough.
Even in terms of inflation/disinflation, the same cubist analogy holds true. Some areas look more disinflationary, while other areas look more inflationary.
In other words, everything is happening at the same time, which defies the logic of fitting the market or economy into a symmetrical box. Or, trying to fit a round peg in a square hole.
How do you invest at this time?
The areas in expansion are in growth and chip stocks. The precious metals, and many industrials, are as well. (DIA is closest to breaking out, with QQQs second.) A few areas in contraction are the regional banks, discretionary retail, small caps, and, in energy, natural gas.
Sectors/Indices are in stagnation, and it’s perhaps the most difficult to predict their next move. This can really be seen in the S&P 500, transportation, and oil.
The same is true with inflation and disinflation. Some areas of disinflation can be seen with the recent ISM and PMI numbers. Housing and labor patterns tend to support disinflation. Yet inflation has not gone away, especially if one considers the falling yields and dollar. We have seen a massive rally in sugar, coffee, gold, silver, and metal miners.
Looking for signs, we see that on Thursday, Regional Banks showed signs of a potential double bottom (a trough). KRE held the March low as this past week; the price came close to that low, yet held closing green for the day. (Although still red for the week.)
We want to see the price clear the cyan line or 10-Day moving average.
Momentum on our Real Motion Indicator, interestingly, showed a mean reversion in March. Since then, momentum has picked up only slightly.
KRE is key as it is a part of the small caps or Russell 2000. Should KRE continue to run from here, that will boost the entire market, offering lots of low-risk opportunities.
Some Favorites:
Both Utilities and the Agriculture ETF DBA have been recent subjects on the Daily and should remain on your radar.
Other sectors to watch are:
- Global Live Streaming Sports/Music-PARA FWONA TME RUM
- Emerging Markets-VGK DAX FXI VNM
- Medical/Healthcare-VRTX BIIB TEVA
- Commodity Staples or Commodity-based companies that have pricing power-TECK VLO
We will report more on these in the coming week. In the meanwhile, have a very Happy Easter weekend.
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Mish in the Media
Mish and Charles Payne rip through lots of stock picks in this appearance on Fox Business’ Making Money with Charles Payne.
Mish talks Beyond Meat (BYND) in this appearance on Business First AM.
In this guest appearance on the Madam Trader podcast, recorded March 20, Mish shares her journey from special education teacher to commodoties trader and now trading educator. Hear her insights on the spring 2023 market conditions and how to harness the right skills to succeed.
Follow Mish as she breaks down current market conditions for her friends across the pond on CMC Markets.
Mish talks about Dominion Energy with Angela Miles in this appearance on Business First AM.
Mish chats with Neils Christensen on Oil and Gold in this article from Kitco.
See Mish’s presentation at Real Vision’s Festival of Learning, exclusively available for Real Vision members.
Mish talks with CNBC Asia about hope, fear, and greed, and what could happen going forward.
Coming Up:
April 11th: Webinar with Bob Lang
April 13th: The Final Bar with David Keller on StockCharts TV and Twitter Spaces with Wolf Financial
April 24-26: Mish at The Money Show in Las Vegas
May 2-5: StockCharts TV Market Outlook
ETF Summary
- S&P 500 (SPY): 405 support and 410 pivotal.
- Russell 2000 (IWM): 170 support, 180 resistance still,
- Dow (DIA): Through 336.25, could go higher.
- Nasdaq (QQQ): 325 resistance, 314 10-DMA support
- Regional banks (KRE): 41.28 March 24 low held, now has to clear 44.
- Semiconductors (SMH): 247 is the most significant support.
- Transportation (IYT): Held weekly MA support and now must clear 224.
- Biotechnology (IBB) Great job changing phases to bullish, but must confirm over 130.
- Retail (XRT): Don’t want to see this break under 59.75, and best if clears 64.50.
Mish Schneider
MarketGauge.com
Director of Trading Research and Education