Michele "Mish" Schneider, Chief Strategist at MarketGauge.com and author of "Plant Your Money Tree: A Guide To Growing Wealth" joined the "Investing With IBD" podcast this week. She covers the navigation tools she uses for gauging stock market strength and introduced the economic "modern family" to paint a picture of economic health.
Audio Version Of Podcast Episode
Navigation Tools To Stay On Right Side Of Stock Market
When navigating the stock market, Schneider likes to use lines as her guardrails. She explained her process of using two sets of calendar ranges each year determined by the first 10 trading days in January and July. Using examples from July 2022, January 2023 and the current market, Schneider explained how where the indexes, sectors, or even individual stocks are in relation to these lines can help guide expectations for important areas of support and resistance.
On top of that she'll use the 50- and 200-day moving averages to determine which of six stock market phases an instrument is in. Schneider also introduced her economic "modern family" that helps illustrate the economic story playing out. From the grandparents represented by the iShares Russell 2000 ETF and SPDR S&P Retail, to the adolescent cryptocurrency space, each member of the family plays their part in the economic household.
Stock Market: Analysis Of Current Action
After explaining her tools she applies them to the current stock market. Right now, we are chopping between a bullish and cautious phase as indexes battle it out at the 50-day moving average line. With the major indexes trading right at the middle of their six-month calendar range, there needs to be more progress to the top of those ranges and beyond to support more aggressive buying. This is what we saw in the first half of the year for 2023.
Schneider also explains that the weaker action in retail and the Russell 2000 points to a breadth problem for the economy. The modern family is showing stress on demand from the consumer but she also notes that pockets of strength in commodities like the oil stocks have provided opportunities over the past few months.
TECK Stock Has Moving Averages Stacked Right
Schneider concludes with a look at a few stocks. Teck Resources isn't a technology stock but involved in metallurgical coal as well as a variety of metal ore mining. TECK stock, which has made notable moves in past stock market cycles, is at the top of its calendar range around 43 and near its highs for the last decade. She added that adding the 10-day moving average, along with the 50 and 200, helps her see the moving averages are stacked properly in a bullish way.
Garmin Stock Goes From Recuperation To Bullish
Garmin is another stock of interest and it was the fundamental story that caught Schnieder's attention. The precision of its GPS instruments is continuing to find new uses included for private jet pilots and fitness enthusiasts.
The monthly chart is clearing a two-year business cycle phase while the weekly chart is showing an overall recuperation phase. Drilling down the daily chart, it's one of just a few names in the current stock market that are showing a bullish phase. Plus Garmin stock is making progress to the top of its six-month calendar range around 108.
COIN Stock Gets Support At Calendar Range Low
Schneider concludes with a look at Coinbase as a stock to represent the volatile teenager of the economic modern family.
COIN stock is still looking at resistance from August 2022 and sitting at the lower end of its calendar range. That could make a good area of support. The moving averages are taking a sharp slope upward and a potential bitcoin ETF is on the horizon. That means COIN stock could be on the verge of phase change. Now it just needs the price to confirm it.
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