Weekly Macro Analysis 17.11.24
Big Picture Overview
I decided to take a deeper look at how I can provide more value with my analysis. I will try out a few ideas, to better express my thoughts and make this report worth your time.
Risk On / Off ratios:
These are some of my Bull market sustainability ratios, that should capture rotation from Risk On to Risk Off sectors, or rotation within Risk On sectors:
BTC/Gold - Very close to new highs, possibly breaking out of a giant weekly base, very bullish for Crypto assets, and related meme stocks, it is also a warning sign, that retail participation (aka gambling), is becoming dangerously high.
Copper/Gold - At the same time, Copper THE industrial metal is taking a beating against the stagflation hedge. Copper is also a speculation on China, so it might not fully picture the US economy. Still not looking great for the world economy.
XLY/XLP - Broke out with the Trump Election, and clearly signals Risk On for the US market right now.
XLK/SPY - Technology vs S&P 500 on the other hand is not looking very good and it did underperform since July already, suggesting a clear rotation from Tech to Industrials, Financials and now consumer discretionary.
IWF/IWD - Growth vs Value, one of my favorite indicators on here. It is still in an upwards trend, but it took serious damage already, and just cant quite get back into the original Up channel, after the false breakout in july.
DJT/DIA Transports vs Dow has been in a downtrend until the FED cut rates, and since then Transports have really taken off, a bullish sign for the markets.
There are many more ratios I like to look at, but these will do it for this post. I will try and mark meaningful changes here, instead of rating them and putting it together, as that actually does not really help much in selecting trades.
What do those ratios tell us right now:
The Bull Market has moved on from technology a while ago, and right now, money is flowing into Consumer Discretionary and Crypto.
Tech and Copper underperforming is a warning sign, and especially if Tech turns south, while Consumer discretionary and Crypto are slowing down later on, we could be very vulnerable in the markets.
Growth needs to pick up against Value, otherwise we are at risk off having a Blow Off top rally in Crypto and Meme stocks, but the overall economy and the stock market might be in big trouble.
Another warning sign are Small and Mid Caps, which completely reversed the Trump gains. So I would be more careful with those.
Consumer Discretionary - broke out big with Trump, but pulled back last week… not yet concerning!
BTCUSD - Also broke out with Trump and didnt pull back, but just kept going, very bullish! The miners and COIN did correct, and are now potentially presenting an entry opportunity after finding support on friday.
My top pick for monday is HUT, which pulled back on wednesday and thursday, but found support on friday and had an inside day. If it breaks the high of friday it will trigger my entry signal.
