Stock Markets Analysis & Opinion

Recap: The Power of the 23-Month Moving Average and How It Can Help Your Trading

Today we have another look at the 23-month moving averages.

The first one for context is of the S&P 500 (NYSE:SPY).

SPY cleared the 23-month in 2023.

SPY tested the 23-month moving average after the breakout in October 2023.

SPY closed today on new all-time highs.

One could say that SPY entered an expansion phase last year and is, well, still expanding.

In contrast, the next chart is of Alibaba (NYSE:BABA) and its 23-month moving average.

We know that if the price clears that MA, then we will assume that the stock has more room to run with a now 2-year business cycle expansion.

Nonetheless, the stock fell after earnings and now we use the support level of $77-80 to gauge the company’s health.

In 2023, KRE was the first sector in the Family to signal a warning in March.

That is when SPY fell to test its 23-month and held it, telling us that the bank debacle while a bit destabilizing, was not a buy opportunity against major support.

Presently, the 23-month MA sits at $51.30.

Today it traded to a high of 51.75, settling at 51.04 or just below the 23-month MA.

Hence, while KRE has been in contraction really since 2022, it now stands a chance of going into expansion.

We are not there yet, but keep your eyes on

  1. KRE holding $49-50.
  2. KRE closing the month over the 23-month MA and staying above there for a great low risk trade opportunity.

Educational purposes only, not official trading advice.

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ETF Summary

  • S&P 500 (SPY) Near all time highs
  • Russell 2000 (IWM) 210.80 ATHs
  • Dow (DIA) 387 support and 400 resistance
  • Nasdaq (QQQ) New all-time highs
  • Regional banks (KRE) Compelling but not there yet
  • Semiconductors (SMH) New ATHs now 230 support
  • Transportation (IYT) 64 support 67 resistance -still relatively weak
  • Biotechnology (IBB) 137 now pivotal while 140 next resistance
  • Retail (XRT) Closed red and looking vulnerable so eyes here and on IYT
  • iShares iBoxx Hi Yd Cor Bond ETF (HYG) Heading to the top of the recent range and back over the 50-DMA

Source

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