Weekly Macro Analysis 30.11.24
Bull Market Rotation
After last weeks Bull Push, we saw some consolidation this week and might see that continue next week as well.
The leadership has shifted from Large Cap Tech in Q1, to Industrials and Financials in Q2 and Q3, into Consumer Discretionary, Crypto and Small Caps in Q4.
IF the USD tops out here, we could see a further rotation into materials, energy and emerging markets. I am on the lookout for big bases in those sectors. But the time is not here yet.
The focus should be Crypto and Small Caps right now with the more aggressive money and MID / XLY / AMZN / HD for the more conservative money.
Bull Market 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:
XLY/XLP - We have consolidated the gains and are ready to push higher… it would be concerning if we break to the downside from this consolidation:
IWF/IWD - Growth vs Value again isnt performing well, but at least it is not breaking down. That would be a Big warning Sign.
NQ/Gold - This may be surprising to some, but since 2021 Gold has been outperforming every other asset class… it corrected recently, could be a buying opportunity.
XLK/SPY - Technology has massively outperformed the S&P 500, yet it looks like it has rolled over now. For many investors this will be quite a rude awakening, if Tech will not just lag, but actually go down.
What do those ratios tell us right now:
Short term, we might move higher in XLY, IWM, MID and Crypto…
Longer term there are some severe warnign signs, one of them:
HYG/TLT - Credit spreads. Junk debt vs the Safe Haven Long Bonds:
