[Market Outlook] The Canary in the Silicon Mine

[Company Logo] The Canary in the Silicon Mine By Keith Schneider October 08, 2023 [image] US equity markets were under extreme pressure in September and part of August as the Fed has been relentless in trying to bring inflation down. The jump in interest rates has been extreme, ranking as one of the biggest moves in rates ever, something equity markets are not particularly fond of. Right now, both the Dow and the IWM have negative TSI (Trend Strength Indicator) rankings, which is a risk-off indication. On the flip side, the S&P 500 just had a convincing bounce off its 200-day moving average. Mortgage rates went from a low of 2.25% to over 7% in 2 1/2 years’ time, with US long bonds dropping more than 50% in value from their highs set in March of 2020. The rate of change has been historic. Markets have now moved from “cash is trash “to cash is NOT trash” with T-bills being an attractive investment as short-term rates now are higher than the inflation rate by over 1%. According to Ray Dalio, investors will be inclined to move money out of equities to short-term fixed income. Meanwhile, we had an important Jobs (Non-Farm Payrolls) report on Friday that was much stronger than expected. After the initial reaction, which was a lower open (down about 1%) equity markets rebounded and closed up over 1% for the SPY and almost 2% for Nasdaq 100. Equity markets might have shrugged off the strong jobs report on Friday, but the long bond (TLT) did not, closing down over 1% while short-term rates eased. This reduced the yield curve inversion which is seen as the next step for indicating a recession is coming. The yield curve inverts first and then heads back closer to normal before a recession hits. Now getting back to the Canary in the Silicon mine, one of the key themes over the past 7 trading days has been that Semiconductors have held up well showing leadership over benchmarks. Semis are a risk-on indicator and when they lead the markets it is considered a positive for stocks in general. Also noteworthy, the outperformance was on good volume, so it is not to be dismissed. [image] The question is… Can this rally hold or is this a temporary relief rally amid the longer-term down wave as we highlighted last week? Is the fact that Semis and growth stocks in general (VUG) are leading this bounce indicative of even more strength and a push to new highs?” In this week’s video, we play out a few different scenarios. Use the links below to continue reading the Big View bullets and watch this week’s video analysis of the current market outlook [Click here to continue to the FREE analysis and video.]( [Click here to continue to the PREMIUM analysis and video](). Best wishes for your trading, Keith Schneider CEO, MarketGauge P.S. When you’re ready, here are 4 free ways we can help you reach your trading goals… - [Book a call with our Chief Strategy Consultant](, Rob Quinn. He can quickly guide you to the resources that you'd like best. - To discuss having assets managed by MarketGauge strategies, contact Ben Scheibe, at MarketGauge Asset Management at Benny@mgamllc.com - Get the foundational building blocks of many of our strategies from Mish's book, [Plant Your Money Tree: A Guide to Building Your Wealth](=), and accompanying bonus training. - [Review quick descriptions]( of our indicators, strategies, services and trading systems here. Get more - follow us here... Twitter [@marketgauge]() and [@marketminute]() and [Facebook]() To stop receiving this go [here.]() Got Questions?Office hours 9-5 ET (New York time) Email: info@marketgauge.com Live Chat: Go to bottom right corner of our [home page.]() Call: 888-241-3060 or 973-729-0485 There is substantial risk of loss associated with trading any securities including and not limited to stocks, ETFs, futures, and options. Only risk capital should be used to trade. Trading securities is not suitable for everyone. No representation is being made that the use of this strategy or any system or trading methodology will generate profits. Past performance is not necessarily indicative of future results. To unsubscribe or customize your email settings, [click here](. "Market Intelligence at a Glance + Tools For Serious Traders" [Unsubscribe]( MarketGauge.com 70 Sparta Ave, Suite 203 Sparta, New Jersey 07871 United States (888) 241-3060