All Things Markets
190: The Weekly Selection
Introduction
Investing in the Face of Uncertainty
Before we jump in, be sure to check out the latest podcast. In my opinion, it covers a ton of strategies, mindsets and ideas that are persistent for any investor and trader. Worth checking out:
Index Overview
Over the last few weeks, we have seen turbulent action on the major indexes. As a result, you have seen less posting activity out of me. While I do like to post, I will never sacrifice the quality of this publication for sloppy posts just to have some volume. If I do not see anything worth discussing, I simply wont post. It’s not that this action is wrong, in fact the opposite is true, I just don’t see a need to waste everyone’s time reiterating what I have for many years.
Taking a look at SPY below, we can see a series of high volume days through the consolidation. These came after hawkish fed comments, a hot CPI report, and a further shakeup in the middle east. All of these events are non issues to the current drivers of the market, and for that reason I see no reason to be concerned with short term price movement.
I’ll spare sharing the chart, but the S5FI reported at 55% of stocks above their 50sma this week. Again, very healthy action especially in this environment we find ourselves in. The talking heads called this market a weak one due to the focus earlier on this year, and now they note that this gauge should read higher since we are in a strong bull. Its exhausting, and everything looks healthy.
Leadership Overview
At this point in the market, it is fair to accept that leadership themes for this year include: Space, Memory, Semiconductors, Datacenter & Grid Infrastructure, Optics & Materials
Thankfully, nearly all of these have convenient ETFs that we can observe to quickly gauge group health. Lets take a look:
UFO: SPACE
DRAM: Memory
SOXX: Semiconductors
Datacenter and Grid Infrastructure
Photonics & Optics
Materials
As we can observe, the primary leadership groups are all at/near all time highs. This is exactly what we want to see while the indexes are moving sideways. It shows that now only do these groups move on their own, but they continuously lead the rest of the market. When these leadership groups cool off, lesser appreciated themes step up to take the torch before the big players continue higher. This has been a persistent idea in this market especially.
As I have said before, as long as the leaders in the market are apart of large, liquid themes with tangible earnings growth and relevancy to the primary drivers of the market, there is nothing to worry about. I have no problem holding good stocks through their downturns, like my RKLB PL GEV and CAT are/have been doing for the last few weeks because I know nothing has changed with the narratives surrounding them.
Looking forward
Taking a step away from data, news, and the AI ecosystem for a moment, I would like to perform a bit of a thought exercise that I do every so often amidst periods of calmness to help me clarify market direction given the current administration.
America’s 250th Birthday in 2 weeks
America Hosting World Cup and its going spectacularly
White House UFC and Nitro Circus exhibit + fights
If we strip away all of the actual information that impacts markets, and just look at things happening within the US this month and next, it would really surprise me to see Trump take any action that would negatively impact the market. In fact, I would go as far as to say that he wouldn’t let the market be anywhere far off highs heading into the 4th of July. For this reason, I would not be short this market.
It seems asinine to think this way about markets, but that’s where we are with the Trump administration. Bread and Circuses are more important than hot data and policy.
Position accordingly.
See you Tuesday for a look into my portfolio, new adds and more. Be sure to subscribe below to get a look into my live trades and thoughts in the chat: