Not a great chart for Utilities against the S&P. Below 200 week, might go down to historic support or even breach it. Frankly I view Utilities as bullish with the expected data center needs + electricity demand growth however a stagflationary environment can be negative for utilities and a higher rate environment as well.
A higher term premium with stable...
XLK/SPY has crossed above the 200 week moving average, secular bull market of tech is back? Might be time to get long tech to not miss the rally if it happens. Tight stop whenever tech loses its 200 week on the ratio.
The US market has consistently outperformed global markets since the global financial crisis, it has also outperformed since the tech bubble. A portion of this can be attributed to a strong dollar (many markets outperformed in local currency). However this strong dollar performance may be coming to an end.
In addition there are structural reasons why the US has...
It would be interesting to see the market bottom at the cross section of the 200 week moving average with the 2022 highs some time by June/July. Markets aren't cheap now however they are above the 200 week.
My framework:
Markets above 200dma go 100% long with base equity allocation (decrease to 90% if RSI is overheated)
Markets below 200dma but above 200 week...
Commodities look to be forming a start of a nice breakout against the S&P. Commodities are undervalued versus history and are a good diversifier for stagflationary environments. it is interesting that commodities haven't seen a stagflationary bid yet. we might see one in the near future.
Major market bottoms in 2009 and 2020 have bottomed at the following trend line for equal weight utilities against the equal weight s&p. If we continue to move down this will be one to watch for a major bottom for the equal weight S&P
Likely the gold outperformance will continue. If we don't get a bear market in stocks we likely will see a 25% outperformance of gold against S&P whereas in a recession/bear market scenario we likely will see a ~100% outperformace of gold against S&P.
In a tariff cancellation scenario + restoration of central bank trust we likely will get a 25% underperformance...
If we take the previous gold cycle move we can expect gold to reach 7K over the next few years. Gold seems to be an asset that follows the text book style technical breakout. Watch out for a retest of the 200dma at ~$2700 and rising.
200 week is at ~$2000 and rising. 200 week is probably not going to be retested anytime soon.
Surprised to see reits continue their underperformance against the S&P, I understand how most market participants view reits as a long term rate play (yields down reits up etc) however I think the market is not taking into account that reits should perform "relatively" well in a stagflationary environment. In other words reits might get a stagflationary bid.
Gold continues its multi week breakout against SPY and seems it will continue so until it hits the resistance trend (possible breaking out further if markets do enter a bear market although I am in the camp of 5,400 being the near term bottom for SPX
Chart doesnt look great for small caps. The S&P likely will continue its outpermance against the russell 2000. Although small caps trade at a discount, the quality of companies in the russell is much lower compared to the S&P. A discount is likely more than warranted
The S&P may be on to a trend of underperforming the equal weight S&P right until it hits the support. An outperformance of RSP likely means a tilt towards value and an underperformance of the MAG 7.
We shall see what happens, I think the Mag 7 can out perform in the short term given the pace of multiple contraction ~37x earnings to ~25x earnings.
The FTSE MIB has been performing well as a result of the increasing expectation of european fiscal expansionary policy as well as localized defense spending (expected economic multiplier effect) Italy has national defense players however Italy has historically been importing the vast majority of its defense needs from the US. Expectations are that this policy will...
Bitcoin is trading on the trend line against spot gold and it looks like we may breakdown and test the lower support, meaning we see short term gold outperformance against bitcoin. I do think we will hold the lower support and bounce back stronger.
I did previously mention that bitcoin may test 81K then continue trading in the parallel channel with a cycle high...
Seems to be that the equal weight S&P is going to breakout against the S&P. An outperformance of rsp is essentially a value vs growth trade. We will see in the coming weeks how this plays out
Commodities are left for dead even though they outperformed during 2021. This is a chart to watch for the long term imo. We could get a break out sometime in 2027
I do think the best way to play the US underperformance story is through Japanese equities. Europe has moved too fast in a short time frame, China seems to me like a short term story whereas Japan seems to be the best way to play it.
Corporate earnings growth has been present in Japan post GFC unlike China and Europe to a lower extent.
Japanese valuations are...
In addition to previous post on spy/efa we can see the spy/urth actually testing the historic support and breaking down. The valuation differential + The destruction of US competitiveness as a result of tariffs would be tailwinds for the continued outperformance of row equities over the US
