According to a poll conducted by CNBC, 56% of Americans said they believe the U.S. is in a recession.
GDP grew by 1.6% in the first quarter of 2024. That is a decelerated rate from the 3.3% growth of the fourth quarter of 2023.
While perception counts for a lot, according to the poll we like to take of the individual members of the Economic Modern Family, they believe the US is in more of a Stagflation.
While the economy has pockets of weakness, there are many other areas that are steady.
While areas of inflation have come down, there are still rising costs impacting Americans.
Please read our weekly Outlook to see more on the statistics impacting the US economy.
As far as our Family, it’s both the story as a whole as well as the interrelationships that keep us on the ride side of the market.
Beginning with our Granny Retail XRT and the weekly charts, all of the charts have 2 light blue horizontal lines which represent a weekly channel that goes back to around the start of 2024.
Each chart has a 50-week moving average in blue and a 200-week moving average in green.
Granny XRT, in spite of everything we hear about the consumer, is definitely in the stagnation camp.
XRT sits above both moving averages although with the 200 above the 50, we call that accumulation and not bullish.
XRT also held the bottom of the weekly channel support. Key.
If that continues to hold, we believe Granny is telling us that she might be ready to go back out and shop, mainly for staples, but we remain keen on the Vanity trade.
Granddad Russell 2000 (IWM) has a similar look to Granny’s.
Since that measures the small caps and companies with a US presence, it is possible that should yields soften more, we could see some buyers here.
We want to see IWM hold the lower weekly channel support. Right now, IWM is looking more marginally ok-we want more.
Big Brother Biotechnology IBB is out there protecting us. With diet drugs a huge hit, this is yet another nuanced area.
IBB) sits just below the 200-WMA. Plus, he is in the middle of the weekly channel range. Furthermore, back in May, IBB handily cleared above the 50-WMA.
We have eyes here next week as the weekly close was solid and IBB could hit 140or higher.
On the bottom row, we have our Prodigal Son Regional Banks KRE.
Yes, KRE sits below the 50-WMA in a bearish phase, which is concerning. But KRE also holds the weekly channel support low tightly.
This is a pivotal chart and a pivotal indicator for the banking industry this coming week.
Transportation IYT was a big subject of ours over the last 2 months. While IYT has fallen from the highs, this past week IYT recaptured the 50-WMA.
If that continues to hold, then we will believe that investments into the areas of the Family offer investors low risk.
Finally, Sister Semiconductors SMH, took all the thunder until the end of last week.
SMH finally took a pause. But unless SMH closes the month below 250, this looks like some profit-taking and not necessarily a top.
This coming week is the last week in June.
Will the Family happily head to the beach?
Or, will they staycation and quibble amongst themselves?
ETF Summary
- S&P 500 (SPY) Correction time? 5400 line in the sand
- Russell 2000 (IWM) 197-202 tightest range to watch
- Dow (DIA) Back near 40k in the Dow
- Nasdaq (QQQ) Bearish engulfing pattern-watching 474
- Regional banks (KRE) Watching the range 45-50 CAREFULLY
- Semiconductors (SMH) Bearish engulfing pattern-watching 260
- Transportation (IYT) Back over the 200-DMA confirmed
- Biotechnology (IBB) 134 support held-back to intriguing
- Retail (XRT) 74.50 support key
- iShares iBoxx Hi Yd Cor Bond ETF (HYG) This is all risk on-as long as it holds above 76.50