Welcome to the new year and a new January reset! A 6-month calendar span could be even more influential than usual.
Let me explain before I show you S&P 500 ETF (SPI) price chart…
After the first 10 trading days in January, a range is established.
That range becomes a guideline for the next 6 months until it resets in July. If the instrument crosses the top of the range by the end of the 10-day period, the statistical chance of an upside is more significant.
Conversely, if the instrument breaks the bottom of the range by the end of the 10-day period, the statistical chance of moving to the downside is more significant.
If the instrument remains within the trading range, then more cuts would be expected until the range is resolved one way or the other.
We at MarketGauge are particularly focused on this upcoming calendar range because of how seamlessly it corresponds with resistance in both price and moving averages.
Here is a chart of the SPI on a daily time frame.
And for fun, we use gold (GLD) as our benchmark, straight from our ACP plugin and Triple Play Leadership Indicator.
We have completed the first 9 days of trading, which means until Thursday the 19ththa calendar range of 6 months will be set.
The price and very likely the top of the full 10 day trading range lines up nicely with the 200 day moving average (green line).
And the price and very likely bottom of the full 10-day trading range lines up nicely with the 50- and 10-day moving averages (blue and cyan lines).
How clean is that?
A break above the price range will also take the SPI into an accumulation phase that clears the 200-DMA, which is likely to bring in even more.
Conversely, a break below the price range will also take the SPI into a bearish phase below the 50 and 10-DMA, which is likely to bring more downside.
See how spy underperforms in gold? You say inflation has peaked? Gold vs. Spies says otherwise.
Also note that our other ACP plugin from Triple Play or Real Motion (momentum indicator) is stronger, above and positively skewed and stacked 50 and 200 moving averages.
However, the RM indicator is also at resistance at the Bollinger Band, which could suggest an overbought SPI with a mean reversion on the horizon.
Regardless, we’re ready and excited to see how the January calendar range is resolved.
Of course, in addition to calendar ranges, other factors should also be taken into account.
And each instrument will create a range.
So, keep a close eye on what happens when the 6 month range is established.
At that point, you’ll have another reliable indicator to track, which should help you cut through the noise of the talking heads.
ETF Trading Analysis and Summary:
S&P 500 (SPI) Closed above 200-DMA, now has to stay above and clear 400.
Russell 2000 (IVM) Can it pass 190? A game changer if it is.
Dow Jones Industrials (DIA) December 348.22 is now looming.
Nasdaq (KKK) Confirmed recovery phase and right at 200-VMA 281 resistance.
Regional banks (KRE) Still the most worrying sector with 60 central and under 57 lights out. Need to clear 65 to stay in the game.
Semiconductors (SMH) Another nail biter that stops at 50-VMA or 226.
Transportation (IIT) Also stopped at 50-VMA or 231.50
biotechnology (IBB) 138.74 December high spot to clear with 130 key support.
Retail (KSRT) Amazing how the 6-month range of January and these 50-WMAs fit into the economic modern family. 66.70 to be cleaned and kept if good.
The author may have a position in the mentioned securities at the time of publication. All opinions expressed herein are solely those of the author and do not represent the views or opinions of any other person or entity.