Bears felt the heat and were squeezed the entirety of last week, as bulls forced a close near the highs of the week on Friday. Markets also digested soft labor data, as well as retail spending numbers that came in above estimates. So, just like that – is the recession canceled? Not so fast – I think that policymakers are walking right into an inflationary trap in the coming months, which could seriously harm the Fed’s credibility in the long-run. But we’ll worry about that later. We have to trade today’s price action above everything else, and ignore the rest of the noise. Fortunately, I’m pleased to report some positive developments on the sector leadership front after last week. Take a look… Technology Surges as One-Week Leader Remember last week when I reported that we had a “risk-on” signal due to industrials outperforming at the one-week interval? Well, last week

If you’ve been following any of my trades in the past few months, I’ve been very loud about the bull trend in gold, and by extension, precious metal stocks. One of my favorite names in the space that I continue to own is AngloGold Ashanti (Ticker: AU). I started buying this stock in late-February, and then in early-March, I issued a “Back up the Truck” alert. The stock has been on a tear all year – it’s up over 60% year-to-date, while the S&P is only up around 16%. But this week, I finally decided to “Park the Truck” on this trade – here’s what I mean… Trading on Cruise Control While it’s true that time in the market matters more than timing the market, timing the market is where one can generate the most alpha. Some people love to disparage the idea of market-timing, mainly because they aren’t very

Well, that sure was a dramatic week! But now that we have the final score from last week’s rollercoaster of trading, a proper assessment can be made. One thing’s for sure – there’s been a total shift in sentiment over the past few weeks. We’re no longer in the feel-good, euphoric environment of mid-July. Now, the trading community’s focus has shifted, completely, from inflation to recession. But as I’ll show you in the updated performance rankings, I think some of that attention may be misplaced. Here’s what I mean… Industrials Emerge as One-Week Leader I’m finally able to report something bullish for stocks in the near-term. Seeing industrials (XLI) emerge as the top-performing sector last week. This isn’t usually a sector that does well if things are about to head south. While industrial outperformance in the near-term may stave off recessionary concerns, it does reopen the door for inflationary pressures.

Hello and Happy Friday TheoTrader! Back in April, I sent you a letter talking about a potential currency crisis, specifically on the Japanese Yen. As it turns out, we were months ahead of the curve, as the Bank of Japan finally lifted off the zero bound recently, which led to a massive rebound in the Japanese Yen. To be clear, these types of moves don’t happen very often. But various cyclical indicators that I use, along with technicals, and a sound understanding of macroeconomic principles had all of my risk indicators flashing red surrounding the Japanese Yen. Now that the “crowd” has caught onto this move, does it mean that most of it is over? It’s side effects spilled over into stocks as I expected, as we saw the biggest spike in volatility since 2020. Is this just the beginning of a greater downturn? Or is the majority of the

Well, by now everyone has pretty much accepted that we’re in a risk-off market environment. The public is starting to panic, as the unwind of the carry trade in the Japanese yen triggers margin calls across the world. I raised a substantial amount of cash over the past couple of weeks, and even had members in chat take some long positions in the Japanese yen. Back in March and April, I did a Mastermind seminar here at TheoTrade where I dubbed 2024 as the biggest opportunity since 2020. The most important thing now is to not make any hasty decisions. In the meantime, let’s review what we’ll want to see from a sector standpoint to signal that a low is near or completed…  Trade the Tape, Not the News To be very clear – this is still a risk-off tape. As evidence, we have utilities as the top-performing sector on

Over the past couple of weeks here in Sector Leader Bullseye, I’ve been ringing the alarm surrounding the flow of capital into defensive segments of the market. In fact, I felt so strongly about it that I was compelled to do a special session on Wednesday on the cautionary rotations taking place underneath the surface of the market.  One of my big concerns right now is that the Fed is late to the rate cut party. We saw the Bank of England cut rates 25-basis points this week, but the even bigger surprise was the Bank of Japan, which finally put an end to NIRP (Negative Interest Rate Policy). The problem now is that the risk-off capital flows are accelerating, and I think we could be in for some real turbulence in the weeks ahead. Check this out… My Risk Dashboard Is Clear: Risk-Off Have a look at my sector

Between election season, economic data, and September rate cuts all but confirmed, markets are fresh off a volatile week of trading. In fact, Friday’s rally staved off what could have been a cataclysmic close to the week. In recent weeks, I’ve made a point of updating you on some of the cautionary capital flows taking place in markets. First and foremost, we have the Dow outperforming the Nasdaq – that’s hardly a risk-on signal. But check out these other sector updates that suggest treading carefully is the prudent thing to do in the coming weeks… Healthcare Can Thank Biotech for Its Bid     The top-performing sector last week was healthcare, which certainly has some defensive elements associated with it. Think about this: Even when the economy slows, healthcare is one of the last budgetary cuts people are willing to make. Even so, I give biotech, a sector I’ve been

Markets have been all over the place this week, but there’s been a true diamond in the rough amidst the turmoil – biotech. As a reader of Sector Leader Bullseye, you’ve been in the loop as to what’s transpiring in this sector, and the good news is that it’s still early.   Yesterday, I unveiled my  A.I. Timing Webs research with Don. Towards the end of the presentation, I shared my bull case for biotech, and tied it into what’s happening in the artificial intelligence front. In other words, the artificial intelligence revolution is still in its early stages when it comes to medical technology and healthcare, which means there’s going to be no shortage of tradable opportunities in the sector.   It’s the main reason why I’m so excited about yesterday’s launch of A.I. Timing Webs. Head on over here and check out the replay if you haven’t –

I hope you paid attention to my warnings in the past week about the market’s abrupt shift to “risk-off” status. This was plainly evident by the flight-to-safety trades in the stock market, and capital seeking refuge in defensive sectors. With that being said, our strict adherence to relative strength principles has allowed us to weather this market pullback well. Biotech, especially, is showing relative strength, and once this selloff is complete, I would continue to look for more leadership in this sector. And it’s not just biotech that’s holding up well – crypto and precious metals are showing signs of life, and the strength of our positions in this space point to further outperformance on the horizon.   In the meantime, I wanted to update you on an important event I’m hosting tomorrow, where I’ll be discussing A.I. Timing Webs. Go here and make sure you’re signed up.  If you’ve

Hello TheoTrader,   Stocks were mostly lower last week, with only the Dow Jones Industrial Average finishing in positive territory. This blue-chip index’s outperformance in recent weeks is a testament to capital seeking areas of safety right now. The biggest risk I see in markets right now isn’t coming from the Fed, monetary, or even fiscal policy. Rather, it’s the seemingly ever-shifting political winds, switching direction yet again this weekend as President Biden dropped his re-election bid. I’ll put it this way: All of the capital flows we’re seeing in the near-term are indicative of this market being late-cycle. Here’s what I mean…   The Hard Asset Theme     Look at the sectors that have captured the leadership positions over the past month, energy and real estate. These both fall under the hard asset category, which speaks to the turbulence in the fiat-money system over the past couple weeks.