Iran a mess, Trump heads to China to try his luck, market internals in focus, Silver/Gold ratio makes a move
It has been intense, but so far rewarding. Playing this stock market game during a war, with oil prices generally waxing in the opposite direction of a majority of markets/assets on any give day.
So Iran is a mess, and off to China goes Trump. We’ll see if he can get a “win” of any kind there. But did anyone think the Iranians were going to just agree to Trump’s demands? Right, I didn’t either. It’s an existential situation for the IRG/regime. For Trump, it’s a pain in the ass.
Anyway, as I’ve been noting to subscribers for a year now, the US market leadership chain, Semi > Tech > Broad (SPX) is and has been intact and indicating bullish, with Semi leading Tech and Tech leading Broad.
A reminder that the above and several other ‘market internals’ charts are always progressing live for review and adjustment/markup at any time at the Indicator Charts page.
Other market internals have been positive as well, although breadth is becoming an issue again, as it thins out to the passively invested headline stocks. Equal Weight SPX is tanking again vs. Headline SPX.
I also wonder if the SPX Advance/Decline line may have double topped.
This comes right on the dot of our upside target (not a stop sign, but an objective now in the books) having been registered for SPX.
As for the Semi sector, we have been on it (and I am still on it to a degree) all year. But certain items, like MRVL and QCOM below, went near vertical on AI progress…
…and it was time for me to sell out (MRVL) and trim (QCOM). There are and have been others I’ve been selling/trimming as well.
And lately, it’s not just a Semiconductor thing. In software, the trick has been to try to isolate those that got hit with the AI-mageddon obsoletion stick and those that are relatively immune and/or actually will be aided by AI agents. DDOG is one of the latter. I trimmed it yesterday and seeded into a bottom feed in another software stock that has not yet picked itself up off the scorched earth grounds.
So AI has been one disruptive force. Another is the GLP-1 craze, and with NVO now gaining traction with its pill form offerings, the intensity is increasing. This disruption has messed with one of my internal indicators, Healthcare vs. the Broad Market (XLV/SPY ratio). The Healthcare industry is itself disrupted by the weight loss drugs. Less obesity = less medical appointments, procedures, devices, equipment. Eh?
You can see the results in Medical Device stock, MDT, which I doggedly held as a paper profit turned to loss. Until I finally dismissed it yesterday at a handy loss.
Bottom Line
There is a war acting like a spanner in the works. There is a president losing his war (if you’re viewing it by the originally stated goals) heading off to China. On that note, there is and has been global trade tension. And there is the disruptive AI and all those lemmings chasing it now, along with GLP-1 and its disruption of the Healthcare industry.
On top of that, CPI is due out this morning (Tuesday), and with the markets interpreting the rise in prices as inflation (it’s not, it’s rising prices due to non-monetary inputs… but that’s a theme for another day) casino patrons are likely to be all rabbit eared over it.
Personally, I am going to stay in tune with the market’s rotations. In particular, the signal that silver gave last week and especially on Monday. If it holds true, our internal rotation theme will be front and center. And not just in the precious metals. Positive silver leadership would be a tailwind for large segments of commodities/resources and certain global markets.
The Silver/Gold ratio is getting knocked back after yesterday’s big upside surge. We’ll watch the parameters closely in NFTRH to confirm the progress of this indicator.
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