Are Stocks Ready To Rip Higher?

Some Charts To Consider

If you find value from my work below, it would mean the world to me if you passed it on to fellow like-minded folks.

What a week it’s been since our letter last Thursday.

For those who’ve just stumbled upon my letter and new to my work, I should say from the start that rather than wade into the current Israeli geo-political conversation and the potential implications it may or may not have across the world, I like to stick to my lane and stay AWAY from politics/news.

That means charts, and lots of them.

As most of you know, I’ve been advocating selectively buying stocks for the last 2 weeks and that hasn’t changed but I do know for many just now, the very idea of buying stocks might make you vomit because of all the fear mongering out there.

But lets kick things off this week with a standard seasonality chart.

QQQ Seasonality

I covered Tech last week - Time To Buy Bonds & Tech so hopefully everyone is already ahead of the game there.

Seasonality has been going to plan so far.

What you’ll probably find over the coming week or 2 are many of the Hindsight Harrys telling everyone why they should have been looking to buy mega cap tech stocks 10 days ago without any time stamped work to back it up.

Just like it worried me a few weeks ago when the relative strength brigade jumped aboard the Oil/Energy trade 3 months after it started, I know I’m going to see them jump on board the tech boat in the next couple of weeks once great beaten down stocks have already moved 10-20%.

It’s a genuine worry for me.

% Moves From Recent Lows

I had an interesting back and forth with a money manager on X today who was under the impression stocks hadn’t been going up recently because of the chop at the index level.

Rather than get into thoughts and feelings and use words like “I think”, I do try to remain objective and respectful, and assess the data “as is” whilst doing my absolute best to remove the dreaded confirmation bias.

Obviously not all the charts from the data table above are tradeable technical setups, but I believe it’s information we can use to gauge whether stocks are going up or down.

When we’re all looking for a tradeable market bottom after a correction, this data is absolutely invaluable. It always is and it always will be.

My clients/members obviously pay me for this analysis in real time, but I figured it’s information worth sharing in this weeks letter since I’ve been putting bullish tech charts to them for a couple of weeks now.

US Dollar Index (DXY)

For those of you NOT in the know, the chart above for the US Dollar Index is still THE most important chart in finance.

Why?

S&P500 / US Dollar Correlation

If the dollar collapses (like I think it’s threatening to do), that means stocks in my little technical world are likely to go up.

I don’t make up the rules.

I’ve presented this chart a number of times over the last 2yrs and here it is again, just to drive home the point.

We’re not there quite yet, but the dollar is close. Very VERY close.

Hopefully it can follow through.

Discretionary/Staples & S&P500

Another chart that goes under the radar is the Consumer Discretionary/Staples chart and the implications this ratio has for the S&P500.

If we continue to see this ratio climb higher, it’s reasonable to expect stocks to do the same as the chart shows.

Invesco Trust (QQQ)

A lot of the mega cap names have rebounded well from logical levels over the last 2 weeks and the QQQ chart is 1 of those buy low:sell high rangebound charts but if the Dollar meaningfully goes down, it’s logical to expect the Q’s to continue higher.

Apple Inc (AAPL)

Take Apple as an example, big pull back to its 200 Day Simple Moving Average then a text book rebound.

This is 1 of the charts we’ve been covering for a couple of weeks now.

Palantir (PLTR)

Palantir is another great example of a rebound.

1 of our members requested this chart last Friday and while it probably goes out on the risk curve a little, I still shared it with my community.

It confirmed the break out Friday and today it followed through to the upside and has been absolutely wonderful so far with decent upside targets.

That said, let me add that I don’t think buying something after a 10% move is very wise, so if you missed the entry here, perhaps waiting for a possible “re-test” pull back entry would be better if you’re “timing” it.

In Conclusion

Look, I get it.

It’s not all sunshine and rainbows just now, especially if you’re new to the markets and trying to learn.

Maybe you pay too much attention to the mainstream media.

Maybe you pay too much attention to the wrong folks.

Maybe you pay too much attention to data that whilst may be interesting, it ultimately doesn’t drive stock prices.

I’d recommend filtering out the news and watching that US Dollar chart instead, it’s the only data point you need.

If it breaks down, I think stocks might rip higher and catch everyone off guard.

See you next week sometime.

Our Annual Autumn Sale Ends Wednesday