Current market view

I just wrote a twitter thread summarizing my current market view, then realized it would have been tidier to have it all in one blog post.

Overall view

Bullish: Stocks (especially value, small-caps, cyclicals) and crypto.

Bearish: Gold, bonds, China tech.

This is never based on some economic/political view of the world. It's what the momentum & trend are saying. Let me explain using 11 charts.

Broad Stocks

Many developed countries (US, Canada, Europe), plus 9 out of 11 US sectors, are within 3% of their 52-week highs. That’s very bullish to me.

As discussed a few times on this blog, many global equity indices came out of decade+ bases only a year ago. For example, here’s a monthly chart of EWC (Canada):

Crypto

Crypto has historically been a risk-on asset (see the first chart in this blog post: link). And the charts confirm that the picture is bullish:

ETH, Monthly. Breakout in progress.

ADA & SOL, Weekly. Both made breakouts last week.

Gold & Bonds

In a risk-on environment, what tends to suffer? Gold & bonds.

IEF, Weekly. Bonds stalled at a logical juncture.

If bonds are weak, gold is even weaker! Here’s the GLD:TLT Ratio showing a breakdown:

GDXJ, Monthly. Junior gold miners failed to hold an important 8-year support level this month.

Equity sectors

If bonds continue to be weak, what tends to outpeform? Value, small-caps, and cyclicals. And they're all setting up quite nicely:

Summary

Stocks are bullish, especially: value, small-caps, and cyclicals. Ditto for crypto. Meanwhile, we want to avoid gold, bonds, China tech.

This is how things are currently setup. This picture can of course change in the coming weeks or months.

The leadership chart below summarizes everything nicely. Not on here is BTC and ETH, which would be further right on chart.

That’s all. Enjoy the rest of your summer!


Important DisclaimerThis blog is for educational purposes only. I am not a financial advisor and nothing I post is investment advice. The securities I discuss are considered highly risky so do your own due diligence.