To The Moon

Learnings and conclusions from this week’s charts: 1. Bullish rotation remains in play. 2. Tech stocks still look troubled. 3. AI spillovers are helping (already bullish) commodities. 4. Newspaper stocks present a case-study in disruption. 5. Commodity stocks (as a group) look good. Overall, the US tech vs non-tech and US vs global bullish rotations remain in play, this is helping make the tech troubles less of an issue at the index level. There is a risk that gives way to broader downside if tech breaks down, so it’s worth keeping close tabs on tech (among other things…) $S&P 500(.SPX)$ $SPDR S&P 500 ETF Trust(SPY)$ $E-mini S&P 500 - main 2603(ESmain)

With tech in trouble (+a number of macro risks lurking on the horizon), defensives are starting to look interesting… Defensives (i.e. an equal-weighted basket of: Utilities, Healthcare, Consumer Staples) are turning up vs the S&P500 $S&P 500(.SPX)$ —after going through what has been a major relative bear market. But in particular, the following conditions make for a contrarian bullish (relative) setup for Defensives: Defensives’ relative value indicator reached similar levels to that seen at the peak of the dot com bubble (Defensives are extreme cheap vs the index). Investor allocations to defensives are ticking up from record lows. The market cap weight of defensives reached an all-time low late last year. The relative price (black line i

Learnings and conclusions from this week’s charts: Tech stocks (particularly software) remain under pressure. Investor exposure to tech is at historically elevated levels. Surging tech capex is coming at the cost of buybacks. Private equity stocks are also coming under pressure. Defensive stocks meanwhile are looking up. Overall, it’s fair to say that we are at a challenging juncture in markets. Tech stocks are coming under pressure, and from a starting point of major overvaluation and historically high allocations. So it’s worth keeping a closer eye on risk management and potential upside in defensives, while staying pragmatic with the otherwise still bullish outlook for cyclicals/global/commodities… Going it alone? as outlined the other day, the US tech sector remains under pressure, and

Learnings and conclusions from this session: US tech stocks have peaked (+rolled over vs US non-tech, global tech). Sentiment is slumping from previously extreme bullish/complacent. Positioning has also peaked, early signs of rotation showing up. Valuations are ticking down from extreme expensive levels. Stretched valuations reflect strong earnings (but that’s also a risk). Overall, tech stocks have peaked for now. The problem is they’re coming from a starting point of overvalued and overhyped. The benign/bullish outcome would be a plateau in tech and bullish rotation (into traditional cyclicals, global), while the bearish outcome would be outright downside (and rotation into defensives). This report looks at the evidence so far and weighs the next steps… 1. Tech Top (Absolute Terms): 

There’s a change in the air. The gloomy macro clouds of the past few years are starting to lift. Once weak and lagging parts of macro and markets are starting to stir, and a major macro theme I’ve been tracking is showing increasing signs of finally kicking full-swing into gear — today’s chart lays it out simply. Basically what we’re looking at here is a procession of policy pivots from big easing in 2020/21, panic tightening in 2022/23, and then back to easing in 2024/25. The result? Major monetary tailwinds are kicking-in right now. And we are seeing this having a clear positive impact on some of the key areas of the global economy that have previously been in deep stagnation: manufacturing, global trade, commodities, heavy industry. Real world, real growth, traditional cyclical parts of

Learnings and conclusions from this week’s charts: Stocks closed up in January (equal-weight beat cap-weight). A positive January is a positive sign for the rest of the year. Seeing apparent rotation out of crypto into precious metals. Also seeing rotation from growth/tech to value/cyclicals. Signs are it’s a case of “bullish rotation” (broadening bull). Overall, we’ve managed to get off to a decent start to the year with the gains and bullish rotations of January. There are a few risk spots to keep tabs on (price action in crypto, tech/growth), but the relative strength in some of the more cyclical parts of the market raise the prospect of a bullish broadening… Happy New Month! the (market cap weighted) S&P 500 $S&P 500(.SPX)$ closed up +

Hi there, Here's the topics I covered in my latest Weekly Macro Themes report: 1. Treasuries: Cheap valuations, very low allocations, and consensus bearish sentiment/positioning make for a contrarian bullish setup, but the tactical elements are lacking right now (monitoring the situation). 2. Inflation Risk: The risk of a second wave of inflation is credible, and therefore higher-for-longer risk remains a threat for nominal bonds (but may help TIPS[breakevens]). 3. Stocks vs Bonds: The longer-term/strategic charts are pointing to downside risk for stocks vs bonds, but the tactical elements are opposite (bullish technicals, benign macro). 4. Oil & Energy Stocks: Remain vigilant to upside risk in the oil price, and in particular for energy stocks (which are under-allocated, undervalued,

Is this the most hated asset class? The composite positioning indicator below seems to suggests so. Everyone hates bonds right now. And fair enough — there are several obvious reasons to hate them. Returns have been terrible, inflation risk is lurking around the corner, fiscal concerns are running high, and political/governance risk for the US is looking and feeling more like what you’d expect in emerging markets. But all of this is obvious and well known, which means it’s time to think. As the old Mark Twain quote goes, "Whenever you find yourself on the side of the majority, it is time to pause and reflect." When you take an objective and quantitative look at treasuries (I am referring to longer-term) a couple of things stand out. Valuations are cheap. Sentiment/allocations/positioning a

Learnings and conclusions from this week’s charts: 1. Bears have the statistical edge in mid-term election years. 2. The global equity bull market is going strong (+getting stronger). 3. Implied correlations are low (a risk signal, similar to dot-com). 4. High valuations are supported by high expectations on profitability. 5. Energy sector equities are undervalued, underallocated, underestimated. Overall, there’s a fair amount of risk signals waving (e.g. seasonal headwinds, correlations, surging sentiment, lofty expectations), but likewise strong momentum, bullish rotation, and compelling fundamental narratives carrying things along. And amongst all this there’s some very interesting opportunities developing… For SG users only, Welcome to open a CBA today and enjoy access to a trading lim

First they said it was uninvestable.Then it broke out —but they said it was still in a downtrend.Now it’s broken that downtrend line.And there are still several reasons to expect further upside.Here’s why I’m bullish on Chinese stocks:Strong Technicals: as alluded to, we’ve seen 3 key breakouts (through the 200-day average, through long-term overhead resistance, and through the down trendline joining the last two major peaks).Stock/Bond Ratio: we’ve also seen a key breakout in an indicator almost no-one else watches; the Chinese stock/bond ratio (important risk-on signal).Cheap Valuations: Chinese stocks are reasonable vs history, cheap vs peers, and cheap vs bonds (very high equity risk premium).Macro Tailwinds: we’ve seen a steady drift lower in interest rates, incremental stimulus measu