The Deep Dive

The most important charts for 2H 2023

*Reminder there will be no Deep Dive next week in observance of the 4th of July holiday. View the full summer publishing schedule here.

Good morning,

As the first half of 2023 winds down, we’re looking ahead to the second half and providing the most important charts to watch for the rest of the year. Here at Beat the Bench, I don’t do outlooks or provide end-of-year price targets (remember how useful those are). But I can show you what I believe are the most important charts for investors right now, what the technicals are saying, and how we will know if something is changing.

Today’s report will review:

• The most important charts within US equities

• Seasonality and cycles for 2H 2023

• and fixed income markets

Let’s dive in!

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Stocks

“The Split”

As I’ve chronicled since early May, my belief was that the divergent path of the Nasdaq 100 and the Russell 2000 Value Index had to stop. QQQ could still (and has) outperform, but with QQQ at then-resistance and IWN at support, I believed that the correlation had to resume and either both would go down or both would move up. So far, we’re going the right way. QQQ has broken out and IWN is above $130. Hard to be bearish until that changes.

Breakouts coming for technology and industrials?

People are just coming to terms with a market above its August highs, but almost nobody is talking about the all-time highs. That’s interesting because the largest and most important sector in the market is testing those levels. “Oh Scott, but that’s just because of Apple and Microsoft, don’t you know how narrow breadth is?” Well, then why does the equal-weight industrials ETF have the exact same chart?

This is a logical place for a pause. But if both of these ETFs break out and are above those 2021 highs, it would be insane to be structurally bearish on this market.