The July 6-Month Calendar Range Hits August Doldrums
It's summertime, and the living should be easy. Folks do tend to go away in August as the market tends to chop around on lower volume. This August proves to be no exception thus far.
What is interesting though, is looking at the reset of the July 6-month calendar ranges in 3 of the indices and one key sector. To remind you, the range is good until the next time it resets in January 2024. With nearly 3 weeks since the ranges were made, we can potentially conclude that the second half of the year will be less about growth stocks and more about small-caps.
The NASDAQ 100 (QQQ) has yet to clear the July 6-month calendar range high at 383.50. Plus, the Real Motion indicator has a bearish momentum diversion, meaning the red dots sit below the 50-DMA while the price remains above its 50-DMA. Should QQQs remain below the July range high, then the technical trade now is to watch for it to hold 368-369 or the 50-DMA. Furthermore, should that break, then the July 6-month calendar range low will be important at 363.40.
Of course, as it is August, it is also possible not much happens until September and QQQs sit in a range between 383 and 362.
As for SPY, although it is in a bit of a better chart position than the QQQs, it too sits below the July range high with momentum on its 50-DMA. Again, not a wow, but not a dealbreaker at this point.
The Russell 2000 and Retail Sector seem like the apparent places to watch for next moves. The Russell 2000 (IWM) literally dances on the July 6-month calendar range highs. 194.35 (closing basis) is key to hold, and, if it does, with stronger momentum than SPY or QQQ, the rotation into small caps and value could be the thing for the next 6 months.
However, we may still have to live through some August doldrums. Retail (XRT) could just be the deciding vote. The price is currently below 67.40 or the July high range high. Momentum, though, is better provided XRT does not fail to break below 66.00. Right now, looking at the 4 charts, we can comfortably say that risk remains on, and small caps could lead IF Retail holds. If so, then SPY and QQQs will hold as well, but the excitement could switch.
Remember, the first half was all about AI and growth. We are watching to see if the second half becomes all about value. And, in the meantime, we're taking it relatively easy, as August heat can surely be the dog days of summer.
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ETF Summary
S&P 500 (SPY): 450 pivotal, 440 support at the 50-DMA. Russell 2000 (IWM): 191 is the 23-month holy grail, 194 July 6-month range high. Dow (DIA): 35,000 support. Nasdaq (QQQ): 362-382 range. Regional banks (KRE): 50 in focus if holds 48. Semiconductors (SMH): 161 resistance, 150 in focus. Transportation (IYT): July 6-month calendar range high at 259.30 -- closed below it -- caution. Biotechnology (IBB): Compression between 123-130. Retail (XRT): 66-67.40 short-term range.Mish Schneider
MarketGauge.com
Director of Trading Research and Education
