Weekly Macro Analysis 7.12.24
Bulls are unstoppable
Last week I pointed out XLY, Crypto and Small Caps as the best opportunities right now.
While Consumer Discretionary and Crypto worked beautifully, IWM started to break down instead of out of the consolidation, while the money rotated back into Big Tech.
This is not an encouraging sign for my thesis, but might not necessarily be bad for the Bull Market. It could also just be a blip. IWM hasnt violated any important support (234).
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 saw the Breakout from XLY on monday already and it is beautiful:
IWF/IWD - Growth vs Value came back to life, very bullish.
NQ/Gold - If this breaks out to the upside like BTC vs Gold did last week, I have no idea where this Bull market could end… S&P 500 at 8000? 10000?
BTC/Gold - Big and decisive Breakout, with BTC reaching 100.000USD, have I mentioned that I am bullish crypto?? (of course if we have a false breakout it would be devastating)
IWM/SPY - Reversal candle last week, with a follow through to the downside, but approaching BIG support (Green line was resistance in 2001 after dotcom bubble burst… will we go further into bubble territory or return to a business cycle? Or have fundamentals shifted so much that the trash now is in the Russel 2000 while quality resides with the MAG 7?)
What do those ratios tell us right now:
Be Bullish.
This could be wrong, but literally everything I worried about has reversed bullishly and everything I wanted to keep moving just kept going higher.
Biggest signal is the first one: XLY vs XLP, it clearly tells us where Wallstreet is positioning.
At the same time the VIX is getting crushed and we are not even close to overbought on many stocks, if we now rotate back from tech into Small Caps we will see a monster of a rally.