The Next Big Market Rotation

Some Charts To Watch

Before I jump into this weeks letter and get into a few interesting charts, I had a lot of messages across social media this week due to a tweet (below) that I put out on Sunday evening.

My free social media analysis also raised a few questions (also added below for those who missed it), so I’ll try to give a little context and provide some updated charts.

I’d argue what we’ve seen this week (so far) is a checkbox tick for boxes 1-3 with the early innings of 4 beginning.

The only thing left is for a broad based market rally and for the perma bears to look on in horror.

Since the beginning of the month we’ve seen performance

• Micro Caps +8.2%

• Russell 2000 +7.7%

• Mid Caps +6.7%

• QQQ’s +0.2%

The bulk of that performance has occurred over the last few days and the big question everyone has…

What comes next?

Here’s my current 1 chart snapshot of the US Market.

Price keeps things simple.

I don’t need to make up narratives or cherry pick economic data to arrive at a thesis, I prefer to utilise things like ratio charts.

They’re incredibly helpful.

IWM Relative to S&P500

IWM Relative to QQQ’s

If you’re looking for out-performance, they’re useful because there’s no debate to be had, either something is out-performing or its not.

No grey areas, no ifs or buts…. a chart tells us what’s going on.

If the Small Caps are going to begin a period of out-performance, this is a logical place for that to happen.

That’s what I’m currently prepping for, and heaven forbid, if the market switches on 24hrs notice and tells me something different, I’ll be on top of that too.

Emerging Markets (EEM)

Emerging Markets look interesting because there’s the potential for a change of trend, and when you dig into China (40% of Emerging Markets), there are some interesting charts after big recent declines.

There are PLENTY of great looking charts out there, I’ve highlighted plenty below for those that missed the June Outlook at the weekend.

Regional Banks (KRE)

I prefer to keep it simple and treat each chart on its individual merits and look for risk : reward propositions on all manner of charts.

My work isn’t really geared toward any 1 class of investor / trader.

There are plenty of fantastic analysts who bang the drum on relative strength, some focus on break outs, some like to catch falling knives and dollar cost.

That’s all fine.

My work looks at the market in all manner of angles and our Regional Banks bottom call a month ago is a good example of our premium work.

And there’s plenty more charts below for those who missed it at the weekend.

Check our membership options. We might just make a difference.