Weekly Macro Analysis 16.03.24
Has the correction begun?
Lumber to Gold: Risk Off still, although barely
IEF/TLT: Risk Off still, although barely
XLU/SPY: Risk Off still
XLY/XLP: Strong Risk Off
SPY: No ATH this week? Suspicious.
Volume and Breadth this week:
We broke down from a Breadth perspective last week, and also did not make as many new highs.
eTorians are now longer US equity than at any point since I started collecting the data.
Biggest jump was in long GBPUSD.
This is how it looked in sector terms:
Strongest: Energy, Communication Services, Basic Materials
Weakest: Real Estate, Healthcare, Technology,
Conclusion:
My Risk Signals are still pointing to Risk off, along with a broken support on NQ and a fundamental shift into a higher for longer environment, we might get more confirmation of that with next week's FOMC, yet I cannot see Powell being dovish here.
We saw a Break Out in Copper and Oil and the overall sentiment is turning much more bullish, nobody is calling for a recession anymore. Which of course might mean that it is right around the corner.
Last week I did see signs for a correction, and there has been more confirmation of it this week.
Chart of the week: UK100
Instead of chasing tech stocks at those levels, it might pay to look at the UK. We are still slightly below the 2018 highs and maybe we get a sustainable Break Out here.
Another reason for me to look at this trade was the strong GBP that has crowded positioning on the long side by large and small speculators. This might provide fuel to a lagging UK 100, if the pound begins to weaken.