Hi YXI friends,
Welcome back. I have been away (in the “Hawaii of Europe” - Tenerife), so this note picks up from July 15 rather than from last week, and several of these setups have travelled a long way in between.
Last week belonged to commodities. Oil rose 10.3%, copper and the precious-metals miners all gained more than 5%, and the block closed up 3.16% while US equities drifted lower. The spread inside the sectors was the striking part: energy and utilities at one end, consumer discretionary and software both down more than 5% at the other.
Rates are the pressure behind most of it. Yields rose 21-27bp right across the curve over the past month, the futures market now prices nearly 2 hikes by the year-end, and the Treasury account has drained roughly $150B of liquidity in three weeks.
This is also the first note written under a new rule for setting the YX TA Bias (the detailed guidance is shown in the “Chart Label Guidance” section. Every rating is now a statement about reward against risk at the current price rather than about how strong a trend looks.
I changed six ratings today. TLT goes to a tactical overweight at the bottom of its range. GOOGL and TSLA both come off underweight, because the sell-offs I called have reached their measured targets. DXY, AMZN and META step down to neutral.
The Mag-7 is no longer one trade. AAPL has cleared its prior high while META, AMZN, MSFT and TSLA all work through sell-offs. And one number to leave you with: we are on track for the first red July since 2014, with August and September the two weakest months in the twenty-year record.
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DISCLAIMER: This newsletter is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
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