Looking at Modern Economic Family member charts and connecting the different members shows a unique market vantage point.
The Modern Family has continued to serve as a reliable indicator for market direction through the years. The Family gives you an overall gauge of how aggressive or conservative you can be in your trading strategy. Today, it's telling us we need to stay alert.
All of Mish's Modern Family, except semis and biotech, are underperforming relative to the S&P 500 benchmark, a clear risk-off indication. Our proprietary Real Motion Indicator above shows that IWM's downward momentum is in line with the price. In other words, we could see further selling pressure.
Grandpa Russell (IWM) could fall below his 200-week moving average. If IWM breaks current support, this will signal to reduce some high beta exposure and raise stops.
SMH (semis), shown above, have led as seen in our Leadership & Triple Play indicator. SMH is down -30.3% year to date, but is up 12.1% over the last month.
SMH is the largest semiconductor ETF with international exposure. It has overhead resistance on the daily and weekly charts. The daily chart is not displayed, but the 200-day moving average is 224, so only slightly above the 220.04 weekly closing price. SMH shows the 200-week moving average at a higher resistance level of 233.
IBB is above the 50-day, 200-day, 50-week, and 200-week moving averages, placing it as the strongest member of the family. The transportation sector (IYT) regional banks (KRE) and Granny retail (XRT) are losing momentum, which is terrible for the economy and the stock market.
Next week is one of the most event-driven weeks of the year, with CPI, FOMC, and the Triple Witching Hour quarterly expirations. The November CPI inflation report comes out on Tuesday, Dec. 13, with the year-end Fed rate hike and the Powell news conference on Wednesday. Keep an eye on KRE, XRT, IYT, IWM, IBB, and SMH as we move into next week and the holiday season.
All family members are breaking down, and only (IBB) and (SMH) look to have continued technical strength. Following the leaders and decliners will give us a good indication of risk-on or risk-off indicators as Wall Street wrestles with fears about inflation and an impending recession.
As always, there are other factors to consider when making trading decisions, but following the Modern Family members can help you stay informed.
So far, this holiday season, Santa may be coming to town. Keep your eyes on these family members to make sure Humbug doesn't take control.
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Mish discusses trading the Vaneck Vietname ETF ($VNM) in this appearance on Business First AM.
Mish discusses the importance of not adding trading risk into the rest of the year in this appearance on Business First AM.
Read Mish's latest article for CMC Markets, titled "Commodities to Watch in December".
Mish talks stagflation in her interview by Dale Pinkert during the F.A.C.E. webinar.
Watch Mish's appearance on Business First AM here.
Mish hosted the Monday, November 28 edition of StockCharts TV's Your Daily Five, where she covered some of the Modern Family. She also discusses the long bonds and gold with levels to clear or, fail.
Mish discusses "Macro & Market Analysis - Winning Trades in All Markets" in this appearance on the podcast The RO Show with Rosanna Prestia.
Director of Trading Research and Education