Congrats Market Player, you have leveled up another week.
What a relief. What am I talking about? The tech sell-off. Look, it was coming, right? Trees don’t grow up to the sky. And the fact that the tech market was broken by an opinion expressed by Andrew Left of Citron’s Research. Well, that’s just wonderful. Something structural, like a earnings miss or a product failure, that would have been worse. That would’ve wounded the underlying narrative –that AI and related exponential technologies are driving Industrial Revolution 4.0.
This Industrial Revolution 4.0 is really the only narrative in the investing world that normal people can grasp and pursue (just as they could understand the Internet narrative of the nineties). I believe the IR4 narrative has much further to go. And the market will reveal it. We ride the bus.
However, I am not suggesting to buy-the-dip. Why? Because that is more opinion based investing/trading. Get a process. Stick to it. With patience and fortitude.
Relative summation strength. Momentum remains in NDX. Just remember that the McClellan Summations are fairly slow. One day is not going to make huge difference…
Look at that parabolic curve that was… Beautiful and nerve-racking… and broken!
However, beta-rotation model still votes utilities. And its a high probability that rates are rising. Interesting…
Look at the Russell! Reversion play in progress…
Notice below that the SPX is overtaking the NDX in terms of a relative comparison of the percent of stocks over the 50 day moving average.
Notice how the NYSE composite was not only up today. But it broke out! Strange happenings.
However, risk-respect is seeping back into the market. See the jump in Defensive stocks and financials. But not in the junk market. Weird.
Below you can see gold vs gold miners. Truthfully, gold is a strange market. Because it is not just an asset, or currency of exchange, or store of value –it is a world religion. Most of its preachers and prophets will pretend to be cold-eyed economic-types. But just wait. The wild-eyes come through. “All bow down before the golden lord!” they cry. Here is the thing for me. Gold goes up when people get scared. No, it isn’t any good in a real apocalypse. The first guy stronger than you will take it (oh you have a gun, isn’t that cute! We are the government!). But in the kind of geo-political drama that is more likely. Gold goes up. I want to get long gold at some point. Not yet.
Finally, I’m not selling all my positions in /NQ yet (half were stopped out down 60 points). Why? Well, my process says to be patient. Below you can see the TOR ratio doesn’t think you should close yet either.
No inversion. But clustering at the shorter maturites
1y to 10y inversion
7y to 10y invert, but also a small 15y to 20y
Europe (We use Italy and Spain as canaries in the coal mine)
Brazil: no inversion
Have a great weekend.