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Another Market Collapsing

The real reaction to today’s Fed meeting is likely to happen tomorrow.

All eyes and ears were on Chairman Powell today. Most notable was how he and the markets were clearly uncomfortable with the press conference, but it was not until it was finished that the markets all drifted in their respective directions. Gold higher, stocks lower, bonds bounced, and oil continued its collapse–quietly.

With the exception of crude oil, the moves in the above markets were muted, but clearly directional into the close. Oftentimes, the bigger reaction to the Fed comes the day after the news. Now, Thursday will begin with some very volatile-looking charts.

The regional banks will undoubtedly get most of the attention on Thursday as they continue to slide on after market news that PacWest Bancorp (PACW) is “looking at strategic options” and its stock is down over 50% in after hours trading. However, there are two other areas of the markets to pay close attention to.

First, there’s Crude Oil. The ETF, USO, has not only had its largest two-day decline since July 2022, but is also trading below a very important level. The red line on the chart above represents the January 2023 low.

At MarketGauge we treat the January low as an important psychological level in any market, and USO has a history of experiencing big drops when it trades below this level. If you’re interested in this concept, look at the price action in 2018, 2017, 2015, and 2014 around the January low price level for each respective year.

In addition to breaking the January low, USO has moved under the 23-month moving average. If you’ve been listening to Mish lately, you’ve undoubtedly heard her explain that breaking this moving average is very bearish.

A collapse in crude prices may help the consumer and inflation, but it will also project a lack of confidence in the strength of the economy and hurt company profits in the energy sector. On balance, a big move down will weigh on the general market in the short-term.

Second, I recently explained why SMH was in a precariously bearish condition on Mish’s Daily. As you can see in the chart below, and since that article, SMH has broken below its 50-day moving average and then rallied back up to it.

The ETF is again in the same very precarious position. The MG Leadership line is bearish (blue line under red) and Real Motion is also confirming the bearish break of the 50-day average.

Historically, the SPY and QQQ have a hard time rallying when SMH is bearish on the MG Leadership indicator. If SMH breaks lower, the price pattern and indicators suggest the breakdown will continue. This would weigh heavily on the general market. If SMH trades back over $250, this bearish warning will be negated.

Don’t take your eyes off SMH.

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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

Mish discusses the FOMC and which stock she’s buying, and when on Business First AM.

Mish covers strategy for SPY, QQQ, and IWM.

Mish and Nicole Petallides discuss cycles, stagflation, commodities and some stock picks in this appearance on TD Ameritrade.

Mish talks movies and streaming stocks with Angela Miles on Business First AM.

Mish and Charles discuss zooming out, stagflation and picks outperforming stocks in this appearance on Making Money with Charles Payne.

We all know at this point how difficult the market has been with all of the varying opinions regarding recession, inflation, stagflation, the market’s going to come back, the market’s going to collapse – ad nauseam. What about the people stuck in the middle of a range bound market? Mish presents her top choices for shorts and longs on the Friday, April 21 edition of StockCharts TV’s Your Daily Five.

Mish and Benzinga discuss the current trading ranges and what might break them.

Mish discusses what she’ll be talking about at The Money Show, from April 24-26!

Mish walks you through technical analysis of TSLA and market conditions and presents an action plan on CMC Markets.

Mish presents two stocks to look at in this appearance on Business First AM — one bullish, one bearish.

Mish joins David Keller on the Thursday, May 13 edition of StockCharts TV’s The Final Bar, where she shares her charts of high yield bonds, semiconductors, gold, and regional banks.

Mish joins Wolf Financial for this Twitter Spaces event, where she and others discuss their experiences as former pit traders.

Mish shares her views on natural gas, crude oil and a selection of ETFs in this appearance on CMC Markets.

Mish talks what’s next for the economy on Yahoo! Finance.

Mish joins Bob Lang of Explosive Options for a special webinar on what traders can expect in 2023!

Rosanna Prestia of The RO Show chats with Mish about commodities, macro and markets.

Coming Up:

May 2nd-5th: StockCharts TV Market Outlook

ETF Summary

S&P 500 (SPY): 23-month MA 420.

Russell 2000 (IWM): 170 support, 180 resistance.

Dow (DIA): Over the 23-month MA-only index.

Nasdaq (QQQ): 329 the 23-month MA.

Regional Banks (KRE): 43 now pivotal resistance.

Semiconductors (SMH): 246 the 23-month MA.

Transportation (IYT): 202-240 biggest range to watch.

Biotechnology (IBB): 121-135 range to watch from monthly charts.

Retail (XRT): 56-75 trading range to break one way or another.

Geoff Bysshe

MarketGauge.com

President

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