A red week for the indices across the board, but the pullbacks look relatively orderly so far.

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SPY Chart

SPY closed at 765.72, 1.8% below its all-time high and still above both its 20 and 50-day SMAs. The 755-760 area I’ve been watching is now just under the 20-day SMA, which sits just above 762. I am planning on putting in a bid for the S&P 500 CFD at 7580, which equates to around 755 on SPY, with a stop under the 50-day - but want to give it a little room, so around 7495 or 745 on SPY.

If my bid doesn’t fill, and SPY bounces from the 20-day SMA or undercuts and reclaims it without reaching my level, I will reassess tomorrow.

QQQ Chart

QQQ closed at 713.44, 4.7% below its early June all-time high and right on its 50-day SMA. However, the 20 and 50-day are still not bullishly aligned. I don’t plan to take a position in QQQ yet but will be watching to see if it holds 709 - if it does, I may also take a small position. If it fails to hold 709, then 700 is my line in the sand. Below 700 I believe it opens the possibility of a deeper pullback to retest the July 29 low around 661. That would also be confluence with a rising 200-day SMA, which currently sits just under 653.

Market Temperature

The Market Temperature came in at 5.7, down from 5.9, a third straight week in the Goldilocks Zone.

The Tape/Trend pillar accounted for the whole decline. Breadth declined, with 56.2% of US stocks above their 50-day moving average, from 62.6%, and SPY’s weekly RSI eased to 63.1 from 67.8. SPY and QQQ both held their trend states.

The Monetary/Macro pillar rose slightly due to continued weakness in the dollar.

The Regime pillar also improved a touch. However, the discretionary vs staples ratio scored higher almost entirely due to the model’s four-week lookback - the XLY/XLP ratio itself was flat on the week.

The VIX edged up to 15.1 from 14.3, which the model reads as a contrarian positive, so Sentiment rose fractionally, but was unchanged to one decimal place.

GICS Sector Relative Strength

Health care, energy and materials were the only sectors to finish higher - health care and energy remain in Leading, materials stayed in Improving.

Utilities, technology and industrials led the declines.

Five sectors changed quadrant, but four of them crossed by a fraction of a point and are bunched around the boundary lines.

Technology is in Weakening for a second week.

Momentum Leaderboard

12 of the 20 are new, and the turnover tells the week’s story. What arrived was commodities and crypto: Ethereum (ETHA) and Bitcoin (IBIT) at number one and four, Copper Miners (COPX), Platinum (PPLT), Gold (GLD), Silver (SLV), Uranium (URA) and Water Resources (PHO). The rest of the board is mostly biotech and healthcare.

All four energy names (XOP, XLE, RSPG and OIH) and all three financials (KBE, KRE and KCE) dropped off.

Only 8 of the 20 are in Strong Uptrends, down from 14, and 9 are in Recovering Uptrends.

Software EW (XSW) and Medical Devices (IHI) now share the longest streak at four weeks.

Trend States Across the Universe

Strong Uptrend went from 48 to 43 and Neutral from 1 to 14. The names that moved into Neutral are mostly cyclical and rate-sensitive: industrials, regional banks, the bank ETF, transports, airlines, semis and aerospace. Still, 76 of the 121 remain in one of the three uptrend states.

Industry Breadth (Leading Stocks)

Last weekend only 2 of 33 industries sat below the 50% line. This weekend it’s 16 of 33, and roughly half the names in the universe are above their 20-day SMA, down from three quarters.

The top of the board is now oil, precious metals and medical specialties.

Last weekend regional banks and major banks had every name above both SMAs, now none are above the 20-day and only 40% and 33% respectively are above their 50-day.

Technology reversed as well. Packaged software is the first tech industry on the board at 13th, and along with computer peripherals are the only ones still above the line. Semiconductors dropped to 28th of 33, with only 17% of names above their 20-day SMA and 8% above the 50-day. Electronic components and electronic production equipment have no names above either.

Semis Fail at the 50-Day

SMH Chart

SMH poked its head above 592 and its 50-day SMA on Monday but then gapped down on Tuesday and was weak for the rest of the week. It fell 4.7% and closed at 560.42, below both its 20 and 50-day SMAs. It managed to hold the AVWAP from the March 30 low, which sits around 556. If it loses that, a retest of the July 29 low at around 504 looks more likely.

XSD Chart

Equal-weight semis (XSD) fared even worse, down 8.5% on the week and the weakest ETF in the universe.

Software Showing Continued Strength

XSW Chart

Equal-weight software (XSW) gapped down on Monday but rallied through the week from there, finishing up 0.7%. It looks constructive here, consolidating just under its all-time highs from December 2024 and September/October 2025.

Commodities and Crypto

With the US dollar down again, there was a broad move into commodities and crypto. Gold and silver miners (GDX & SIL) and metals and mining (XME) had already been on the Momentum Leaderboard for a couple of weekends and were consolidating above their 200-day SMAs. GDX and SIL ripped again last week, both up over 10%. Copper miners (COPX), gold (GLD), silver (SLV), platinum (PPLT), water resources (PHO) and uranium (URA) all joined the Momentum Leaderboard this week. Crude (USO) rose 6.4% and the commodity basket (DBC) was up 4.2%.

Last week I said I had less conviction in the gold and silver miners move because spot gold and silver were still trading below their 200-day SMAs. However, gold ripped straight through it last week. Silver still sits below its 200-day, but I wouldn’t be surprised to see it follow gold this coming week.

Spot Gold Chart

Spot Silver Chart

Lithium (LIT) had a nearly 30% drawdown between early May and late July but has started to recover with gold and silver so far in August. It hasn’t moved as much as the gold and silver miners, but the chart looks like it may be setting up for continued upside and is offering a good potential risk reward trade here. I am going to try and buy weakness back towards 75, with a stop-loss under the 20-day SMA (currently around 72.5 and rising) and a potential target around 84.

LIT Chart

Bitcoin (IBIT) and Ethereum (ETHA) both had monster weeks up over 20%. Both are now above their 200-day SMA - the ETFs only just, but the spot charts are well above. It wasn’t just the big two either, with crypto total market cap excluding BTC, ETH and stablecoins up over 20% for the week as well. I will try to write a deep dive into crypto and which coins are leading later this week.

BTC Chart

Total3ES Chart

Follow-Up on Ethereum

My buy stop order triggered last Wednesday. Due to the intensity of the move, I took profits near my first target around 2350. It has been consolidating above 2350 over the weekend and so far today on Monday (Melbourne time). If I were still in the trade, I would trail my stop-loss up under 2350 to lock in some gains. Ideally it can consolidate last week’s move here for a bit and offer a new entry with good risk-return.

Ethereum Chart

Healthcare and Biotech

Healthcare (XLV) was the best GICS sector on the week and broader health care & biotech occupy 7 of the top 20 ETFs on the Momentum Leaderboard. Biotech Large-Cap (IBB) is a bit extended, around 4 x ATR from its 20-day SMA, and Genomics (ARKG) closer to 5 x ATR. Pharmaceuticals (XPH) is highly correlated with IBB but only around 2 x ATR from its 20-day. I am considering entering a position if we get a pullback towards 71, with a stop-loss under 69.

XPH Chart

Follow-Up on XBI

I am still waiting on a resolution from my broker on the missed 154.50 fill - XBI itself closed at 165.73, roughly midway between where the entry should have filled and my initial target of 174.

Yields

The 10-year yield finished at 4.74% and the 30-year at 5.28% - right around the levels I said I’d be watching last week. It’s hard to know what to make of this, especially given the announcement by Bessent that the Treasury would double its long-end buybacks, which initially caused yields to fall, only to rise again on Thursday and Friday. I am not overly concerned at this stage, but it’s something to keep an eye on in coming weeks.

The Week Ahead

Last week’s broadening stalled and semis (SMH & XSD) failed at their 50-day SMA. The four names on my watchlist (STX, TER, LITE and TSEM), some of the better-looking AI related names, had a bad week after one good day on Monday. Now only LITE is above its 20 and 50-day SMA. For now, it looks like there are better ponds to fish in.

On the positive side the major index pullbacks still look orderly for now and the market temperature held in the Goldilocks Zone. In terms of new trades, I am going to focus on SPY (or the S&P 500 CFD), LIT and XPH, and will be watching crypto closely this week.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only FANG+ and the Dow finished the week lower. 6 of the 9 made their highest weekly closes ever - SPY, both equal-weights (RSP & QQEW), mid caps (MDY), small caps (IWM) and micro caps (IWC). The outperformance of the equal-weight indices, along with the small and mid caps, is one of several data points showing a broadening out in participation.

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SPY Chart

SPY grinded higher throughout the week, despite the underperformance of mega-caps generally. We didn’t get the pullback I was hoping for, but I will remain patient, looking for a lower risk entry. An orderly pullback to 755-760 that finds support and bounces remains the ideal scenario for new longs in my opinion.

QQQ Chart

QQQ cleared the 726 level I was watching and closed at 731, which is about 2.0% below the June high around 746. I would be less inclined to buy a pullback in QQQ, with its 20 and 50-day SMAs not yet bullishly aligned. Further strength towards 746 and a consolidation that forms a handle, or a tight area under the ATHs - letting the SMAs catch up to price and the 20-day to cross above the 50-day, would provide an excellent new low risk entry, if it were to then break out to new highs.

Market Temperature

The Market Temperature came in at 5.9, down from 6.0, a second straight week in the Goldilocks Zone. Last week’s 6.0 was rounded up from 5.96 and the 5.9 was rounded down from 5.92, so the actual move was just four hundredths.

The Tape/Trend pillar was identical to last week. Breadth improved a touch - 62.6% of US stocks are above their 50-day moving average, from 61.4% - offset by a slightly lower RSI score - the RSI itself rose week-on-week but scored lower due to the model’s two-week lookback window.

The Monetary/Macro pillar firmed slightly, with the MOVE index easing further and the dollar drifting sideways in a range.

Regime was unchanged, with growth vs value still scoring in value’s favour.

The VIX fell again, to 14.3 from 14.9, which the model reads as a contrarian negative, so Sentiment was again the only pillar to fall (to one decimal place in the graphic it was steady at 0.4, but the raw score went from 0.42 to 0.35).

GICS Sector Relative Strength

Energy and healthcare moved back into Leading after just one week in Weakening, and financials joined them. Technology fell out of Leading into Weakening after one week.

As I wrote last week, a lot of sectors are bunched around the boundary lines, so I wouldn’t read too much into any single crossing - particularly for XLC and XLRE which both sit very close to the RS-Momentum borderline and XLF which sits right on the RS-Trend borderline.

9 of the 11 sectors beat SPY, on a week the index finished higher - a first in the 18 weeks I’ve been tracking this data.

Momentum Leaderboard

11 of the 20 are new. Energy returned after two weekends off - Oil & Gas E&P (XOP), Energy (XLE), equal-weight energy (RSPG) and Oil Services (OIH) are all back on the board. As are the financials (KBE, KRE and KCE), along with healthcare (XLV and RSPH).

Ethereum (ETHA) dropped off after six straight weekends - it had the longest streak on the board. Gold Miners (GDX) slipped from first to fourth as the miners consolidated their big gains from the prior week.

Medical Devices (IHI) at number two is the only name on the board not in an uptrend state, and 14 of the 20 are in Strong Uptrends. Last weekend only 6 were in Strong Uptrends, with 4 names still in downtrend states.

Trend States Across the Universe

Despite little change at the aggregate level, 17 names moved into Strong Uptrend and only 2 dropped out - with the net effect being 15 more names now in the Strong Uptrend state. It wasn’t just energy names either - the equal-weight Nasdaq, the Nasdaq Next Gen 100, staples, real estate, regional banks, transports and Japan all moved into Strong Uptrend states too. Nearly 40% of the 121 ETF universe are now in the Strong Uptrend state.

Industry Breadth

The broadening shows here too. 6 industries have every name above both SMAs - oil and the banks dominate the top of the board, with precious metals there for a second week.

Only 2 of the 33 industries on the board this weekend, trucking and REITs, sit below the line, which marks where fewer than half an industry’s names, on average, are above their 20 and 50-day SMAs. Two weekends ago, 19 of the 39 industries were below it. Last weekend, 8 of 37 were. If you’re wondering why the number of industries each week is different, it is because this universe contains only stocks in the Russell 1000 and Nasdaq 100 that have outperformed the Nasdaq 100 in the trailing 12 months - a floating universe.

The technology industries are improving as well. Two weekends ago, 7 of the 9 tech industries were below the line. Last weekend it was down to 2 - semiconductors and data processing services. This weekend there are none.

Semiconductors continued to improve - 88% of names are now back above their 20-day SMA, from 73%. However, only 36% are above the 50-day, up from 19% - better, but more work to be done for many of these names to repair the damage sustained in the big July selloff.

Packaged software keeps climbing up the board, placing at number 7. The industry group has 15 names this weekend, nearly all are above both SMAs, and it has the best one-month median return of any technology industry, at 10.8%.

The Return of Oil

Crude (USO) rose 7.3% and jumped from Neutral to a Strong Uptrend. Now all the energy ETFs I track are back in Strong Uptrends. The last time energy led the momentum board, in late July, it was a defensive story - Anti-Beta was at number four, Low Volatility and Utilities were on the board, and only 2 of the 9 major indices finished that week higher. This time those risk-off proxies are not on the board, 7 of the 9 indices were up - led by the equal-weight and smaller cap indices - and 88 of the 121 ETFs are in uptrend states.

USO Chart

Semis Still Below Their 50-Day

SMH Chart

SMH added 0.9% and closed at 587.8 - still below the 592 level I’ve been watching, and 0.6% under its 50-day SMA. It seems there is a bit of a battle going on at this level. I’m waiting for SMH to clear 592 before getting more bullish.

XSD Chart

Equal-weight semis (XSD) finished flat, below its 50-day SMA and right on the AVWAP from the March 30 low for a second week running. I want to see it clear those levels and potential resistance at 575.

Gold, Silver and the Miners

GDX finished flat and SIL added 1.2%, both still above their 200-day SMAs. A nice digestion after huge moves the prior week. A breakout after some more sideways action could provide an entry opportunity. However, the fact that both spot gold and silver are yet to reclaim their 200-day SMAs reduces my conviction at this stage. Although both spot contracts also had constructive looking consolidations last week.

GDX Chart

Follow-Up on the Ethereum Trade

I entered the first leg of the Ethereum position I outlined last weekend, buying around 1915, and used the tighter stop-loss under the 20-day SMA at 1875 rather than the wider one under the August 1 low, around 1820. I was stopped out on Monday overnight (Melbourne time) for a relatively small loss. The low of the week was around 1850, so the wider stop would have kept me in the trade, but I didn’t want to sit through chop on a larger decline. It also allowed me to take a bigger position for the dollar risk I allocated to that half of the position. I still have the second leg as a resting buy stop order at 1950, in case it does push higher.

Ethereum Chart

Follow-Up on XBI

A quick follow-up on XBI. I had a buy limit order at 154.50 which should have filled on Friday, but there was an execution issue which my broker is looking into. My stop-loss on this is at 149.50, with an initial target around 174, as outlined last week.

XBI Chart

The Dollar and TLT

The DXY spent another week below 100 in a tight range. As I finish writing this on Monday evening Melbourne time, DXY is down and has undercut the recent lows of the range from the last couple of weeks.

TLT closed last week at 82.04, under the 82.77 low from May I’ve been watching. The 10-year yield finished at 4.70% and the 30-year at 5.26%, both a touch higher, but they have been going sideways during August and are both yet to take out their July 31 highs, which were 4.74% for the 10-year and 5.27% for the 30-year. These are the levels I will be watching now.

The Week Ahead

The temperature held in the Goldilocks Zone and participation broadened on multiple measures. It’s even more impressive that all of this came in the face of higher oil prices and continued uncertainty in the Middle East. On the negative side, SMH still hasn’t reclaimed the 592 level - it’s been several weeks now - and there are plenty of individual AI names that still don’t look very healthy. Even among the better charts, there’s not a lot in buyable positions. I’m watching yields as outlined above, a significant break higher above their respective July 31 highs would lessen my conviction to get aggressively long. Although I always place more emphasis on the individual chart I am trading.

In terms of new trades, I am looking at SPY or CFD equivalent to retest the breakout area and buy strength on a bounce from there if it occurs. For QQQ, I would like to see a handle or tight consolidation a bit closer to the ATHs and buy a breakout. For individual stock names I am watching Seagate (STX), Teradyne (TER), Lumentum (LITE) and Tower Semiconductor (TSEM) for possible entries. All four have shown relative strength, are within about two ATRs of their all-time highs, are above their moving averages, are not extended, and have reported earnings. The only thing missing is the 20-day crossing back above the 50-day - and all four are close. I will also have a resting buy stop order for Ethereum at 1950.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, all nine finished the week higher and, other than the Nasdaq 100, made their highest weekly closes ever.

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SPY Chart

SPY finally resolved its 2-month consolidation, driving higher on Monday and Tuesday. Tuesday’s gap and go took it to new all-time highs. Wednesday’s gap up was sold into, but selling never accelerated and Friday’s close was quite strong. If we get a bigger pullback, the top of the old range around 760 is the first level of potential support, with the 20-day SMA near 750 and rising. I would look to buy strength if we retest 755-760, but it might not be that easy.

QQQ Chart

QQQ rose 5.1% and is back above its 20 and 50-day SMAs - although they are not yet bullishly aligned. Last weekend I said I’d be watching whether it could push higher early in the week and set a higher low above 685 on any pullbacks. Tuesday’s move was explosive and the pullback on Wednesday and Thursday didn’t even take out Tuesday’s low, let alone fill the gap from Monday’s close around 700. I’d like to see that level hold, with 686 as the last line in the sand. If it can clear 726, it could make a run at the June high around 746.

Market Temperature

The Market Temperature jumped to 6.0, up from 4.8, out of Cautious, where it has been for three weeks, and back into the Goldilocks Zone. If you’re wondering why 6.0 isn’t classified as Strong, it’s because the reading to two decimal places was 5.96.

The Tape/Trend pillar drove most of the gain. QQQ improved from Neutral to a Recovering Uptrend, the SPY weekly RSI rose to 67.1 from 60.8, and breadth expanded - 61.4% of US stocks are back above their 50-day moving average, from 51.7%, and 61.3% above their 200-day, from 56.1%.

The Regime pillar also improved. High beta vs low volatility flipped back to risk-on, and the discretionary vs staples ratio continued higher. Growth vs value still scores in value’s favour.

The Monetary/Macro pillar firmed as well. The MOVE index fell around 13% on the week to 72, and the dollar eased.

The VIX fell to 14.9, from 16.0, which the model reads as a contrarian negative, so Sentiment was the only pillar to fall.

GICS Sector Relative Strength

Technology moved back into Leading after a big 7.2% week, and it’s the only sector there - for the second time in a month. Materials crossed into Improving, joining financials.

Health care and energy both dropped out of Leading into Weakening. Energy was down 3.4% and, along with utilities and real estate, was one of the three sectors to finish lower on the week.

Discretionary, industrials, communications and staples all slipped into Lagging despite all four finishing the week higher. Apart from staples they all had good weeks - they just lost ground relative to a very strong SPY.

A lot of the sectors are bunched right around the boundary lines this week. Six of the eleven sit within a point of a line, so I wouldn't read too much into any single quadrant change.

Momentum Leaderboard

Twelve of the twenty are new again this weekend. Gold Miners (GDX) tops the board after sitting in a Strong Downtrend just a week ago, with Silver Miners (SIL), Copper Miners (COPX) and Metals & Mining (XME) rounding out the top four. Palladium (PALL) and Uranium (URA) also arrived, as did the homebuilders (ITB & XHB).

All five international names dropped off - China Internet (KWEB), China Large-Cap (FXI), Hong Kong (EWH), Germany (EWG) and India (INDA) - along with the financials (XLF, RSPF & KCE) and Anti-Beta (BTAL).

Genomics (ARKG) returned after two weekends off.

Ethereum (ETHA) now has the longest streak on the board, at six straight weeks.

Trend States Across the Universe

Quite the jump on this board. Neutral collapsed from 28 names to just 2. The biggest jump was in Recovering Uptrends - price back above at least the 20 and 200-day moving averages, but the averages themselves not yet in bullish alignment.

87 of the 121 ETFs are now in one of the three uptrend states, up from 51 - both the level and the one-week change are the largest in the five weeks I’ve been publishing it.

Industry Breadth

The turnaround shows here too. 336 of the 355 names on the board were also there last weekend - what changed is how many are back above their moving averages. On those same names, the percentage above their 20-day SMA went from 49% to 69% in a week.

Last weekend semiconductors sat third last on the board, with 8% of names above their 20-day SMA and none above their 50-day. This weekend 73% are back above the 20-day, though only 19% are above the 50-day. Seven of the nine technology industries were below the line last weekend. Now only semis and data processing services are.

Precious metals and steel have every name above both SMAs, alongside investment managers and multi-line insurance.

The Semi and AI Names Still Not Confirming

Semi and AI names generally had a big bounce last week, but many are yet to reclaim their 50-day SMA. Also, the three earnings I said I’d be watching - AMD, Western Digital (WDC) and SanDisk (SNDK) - all beat, but AMD was down just over 4% after reporting, while WDC fell over 16% and SNDK just over 10% - poor reactions from some prior leaders in the strongest tape week in months.

SMH Chart

Two weekends ago, I was watching 536 and 592 on SMH. The 536 level broke during the late-July selloff, but last week’s 7.8% rally took it back above its 20-day SMA and AVWAP from the March 30 low, closing at 582.70. However, it still sits about 2% below its declining 50-day. Further strength and a reclaim of this level would be a positive for the bulls. But I remain open-minded to the possibility of another leg down.

XSD Chart

Equal-weight semis (XSD) rose 11.7% and broke out of the descending channel it had been in since late June. It closed right at its AVWAP from the March 30 low, below its declining 50-day SMA.

Other Tech Breaking Out to ATHs

CIBR Chart

Cybersecurity (CIBR) broke out of its two-month range, up 6.6% on the week and in a Strong Uptrend.

QQQJ Chart

The Nasdaq Next Gen 100 (QQQJ) - the hundred names next in line for the Nasdaq 100 - also broke out of its two-month range.

Biotech Showing Strength Again

Large-cap biotech (IBB) made a closing weekly all-time high, and the ARK Genomics Fund (ARKG) is back on the momentum board at number nine. Equal-weight biotech (XBI) also looks good.

XBI Chart

XBI bounced after testing the 50-day SMA on Monday - up 7.1% for the week, and back above its 20-day SMA and the AVWAP from the July high. I am going to try and get back into this - ideally closer to the AVWAP which currently sits a touch over 153, with a stop-loss just under 150 and an initial target around 174, which is its 2021 all-time high.

Gold, Silver and the Miners

The metals were the story of the week. Gold (GLD) rose 7.3% and silver (SLV) 9.8%, but the miners ripped - GDX up 21.3% and SIL up 20.0%, the two biggest weekly gains of any ETF I track. Noticeably, both miner ETFs reclaimed their 200-day SMAs last week - the metals themselves haven’t yet.

Spot Gold Chart

Spot gold closed just under 4380 - which was the October 2025 high. If it clears that it could make a run for the 200-day SMA which sits around 4500.

Spot Silver Chart

Spot silver also looks like it could make a run towards its 200-day SMA, which currently sits around 71.

Ethereum and Crypto

Ethereum (ETHA) and crypto haven’t participated in 2026, however Ethereum has been carving out higher lows since the late June bottom and is back above its 20 and 50-day SMAs. It has also outperformed Bitcoin during this timeframe. I generally don’t trade anything below a declining 200-day SMA. However, I am willing to make an exception for crypto.

Ethereum Chart

I like the tight ETH setup under resistance here - especially given the action in gold and silver. I plan to take a position around current levels - currently on Sunday evening in Australia it’s trading around 1915 - and would add if it breaks above recent highs around 1940-1950. Initially my max stop-loss would be below the August 1 low, around 1820, but I may use a more aggressive stop under the lows of the last few days and the 20-day SMA, around 1875, and would raise my stop to this level if it does clear 1950, with potential upside targets at 2350 and then 2750.

Follow-Up on the Dollar and TLT

DXY Chart

The DXY spent the week below 100 - continued weakness should be a tailwind for equities, precious metals and potentially crypto.

TLT Chart

TLT recovered during the week to close right back at the 82.77 May low - with the 10-year yield easing to 4.66% from 4.74% and the 30-year to 5.21% from 5.27%. If yields continue to ease, I will be more comfortable adding risk and exposure.

The Week Ahead

The temperature is back in the Goldilocks Zone, SPY at all-time highs, breadth surged, and the momentum board turned over to a far more risk-on look. Last weekend I was neutral and in capital preservation mode, but after last week the market is signalling it’s time to start adding exposure. I’m mindful the semi and AI complex is yet to confirm - I’ll be watching SMH to see if it can clear 592 and whether QQQ continues to outperform SPY. I’ll also keep an eye on 10-year and 30-year treasury yields. However, this coming week I will look to get exposure on via XBI and Ethereum and look to add some S&P 500 through CFDs on strength after a pullback towards 7600, if we get one.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only the S&P Mid-Cap 400 finished the week lower. Interestingly the equal-weight Nasdaq 100 (QQEW) outperformed the cap-weighted index by more than 2%.

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SPY Chart

SPY closed above its 20-day SMA on Friday, which is what turned its trend state back to a Strong Uptrend. However, it doesn’t look particularly convincing to me. Both the 20-day and 50-day SMAs are flat and bunched together within less than 0.5% of Friday’s close.

QQQ Chart

QQQ is still in Neutral and looks weak - making lower highs and lower lows, below its declining 20 and 50-day SMAs. The weekly close was back above the AVWAP from the March 30 low, but only just, as Friday’s gap up was sold into.

Market Temperature

The Market Temperature came in at 4.8, up from 4.3, a third straight week in Cautious. The week-on-week move wasn’t quite big enough to change the direction reading, so it stays Cautious rather than upgrading to Improving.

Almost the entire change was due to SPY flipping back to a Strong Uptrend on Friday. The weekly RSI firmed slightly and breadth was little changed.

The MOVE index rose again, up 8.1% on the week. The level itself, around 83, isn’t at historically stressed levels, but the model looks at the four-week change and over that window it is up around 27%. The US dollar sold off, down over 1.5%, which offset the MOVE’s rise within the Monetary pillar, which ended up basically unchanged.

Interestingly, the VIX fell back to 16.0, from 18.6, which the model reads as a contrarian negative signal, thus the Sentiment pillar was down compared to last week.

GICS Sector Relative Strength

Only four of the eleven sectors finished the week higher, with discretionary up over 6% and utilities down over 4%. The Leading quadrant is now down to just healthcare and energy, as industrials fell out after falling 1.5% for the week.

Momentum Leaderboard

Twelve of the twenty are new this weekend. Software, internet and consumer names returned, and the energy related names all dropped off.

International names stood out - five of the twenty, with China Internet (KWEB) on top.

Six of the top ten in Recovering Downtrend states, and Anti-Beta (BTAL) on the board for a third straight week at number ten, speak to the current state of the market.

Trend States Across the Universe

Some improvement this weekend with more Strong Uptrends, and fewer Downtrends and Strong Downtrends.

Industry Breadth

One thing to keep in mind reading this board. The universe is every Russell 1000 and Nasdaq 100 stock that has exceeded the Nasdaq 100 return over the past twelve months, so it’s a snapshot of longer-term leadership. A significant part of this cohort came from a year of AI leadership. Semiconductors has more individual names (26) than any other industry - but now sits third last on the board, with only 8% of stocks above their 20-day SMA and none above their 50-day.

Seven of the nine technology industries sit below the line, which shows where the average of names above the 20 and 50-day drops below 50%. Packaged software is the notable exception, driven by the likes of Snowflake, Datadog, CrowdStrike and Palo Alto.

Integrated oil and the refiners hold the top two spots on this board, while oilfield services sits in the bottom half. The TradingView industry groups here are much narrower than the energy ETFs.

Semis

SMH Chart

Last weekend I said I was watching 536 and 592 on SMH. It closed the week at 540.53, but this doesn’t tell the story of volatility throughout the week. Monday through Wednesday, SMH was down over 10%. It bounced on Thursday and Friday, but Friday’s gap up was sold into, right around the AVWAP from the March 30 low. The chart looks broken for now, making lower highs and lower lows under its 20 and 50-day SMAs.

Levels I Was Watching on the Dollar Index and TLT

The levels I flagged last weekend were broken, but not in the way I expected.

The dollar broke down - going from about 101.5 to 99.8. However this was at least partially due to Japanese intervention in the USDJPY market late last week. It’s trading a little lower again as I write this on Monday.

DXY Chart

Chart captured Monday - the last candle is still open.

TLT broke the May 19 low of 82.77, closing at 82.25. The spike in yields is somewhat concerning. The 10-Year Treasury Yield closed at 4.74% and the 30Y at 5.27%.

TLT Chart

Follow-Up on Last Week’s Names

I didn’t put on any of the trades I outlined in my watchlist in last week’s note. On Monday the SPY and QQQ gapped up only to sell off hard in the first hour or so.

AMD, Dell (DELL), J.B. Hunt (JBHT), Targa Resources (TRGP) and ATI were hit the hardest - all slicing through their 20 and 50-day SMAs and where I would have had my stop loss during the week. Hewlett Packard Enterprise (HPE) held up better but still undercut both SMAs on Tuesday and Wednesday.

Bank of New York Mellon (BNY), Viking Holdings (VIK), Royalty Pharma (RPRX) and Millicom (TIGO) fared better, but with the volatility during the week and the uncertainty leading into the weekend regarding Iran, I was happy to just watch from the sidelines.

The Week Ahead

Looking through the individual charts this weekend, both ETFs and individual names, there’s nothing I really want to buy here. Even within the stronger looking charts I’m not seeing any clean setups. Conditions are still not favourable for my trading style, and I’m staying focused on capital preservation. Plenty of earnings again this week, but I will be particularly interested in watching the reaction to AMD on Tuesday, as well as Eli Lilly (LLY), Western Digital (WDC) and SanDisk (SNDK) on Wednesday. I’ll also be on the lookout for an IBD “Follow-Through Day” and/or whether the QQQ can push higher early in the week and have a more orderly pullback and set a higher low above 685.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Of the major indices I track, only the EW S&P 500 and the S&P Mid-Cap 400 were up for the week. The Dow was down 39 basis points, but its three-week pullback has been orderly so far.

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SPY Chart

SPY spent another week range bound, closing below both its 20-day and 50-day SMAs. If there is further downside, the AVWAP from the March 30 low, which currently sits around 722.5, would be the first level of potential support. If that fails to hold, a test of the 200-day SMA, which sits 5.8% below Friday’s close, would be possible.

QQQ Chart

QQQ still looks significantly weaker than SPY and closed the week sitting right on the AVWAP from the March 30 low. It held on Friday, but only just. If we see further downside this week, the 200-day SMA currently sits around 643, only 6.4% below Friday’s close. Given QQQ’s ATR% is a little more than 2%, it is certainly within striking distance. There is also no obvious structure or support between the AVWAP and 200-day SMA, due to the furious April/May rally. Between April 16 and May 6 the QQQ rallied about 56 points (8.8%) in just 14 trading days, after breaking out over 637.

Market Temperature

The Market Temperature came in at 4.3, down from 4.6, posting a second straight week in Cautious. As I wrote four weeks ago in this post, a week or two in Cautious is close to a coin-flip historically. It’s sustained weakness below 4.0 that has mattered.

Last week felt worse than a 0.3 drop. The Tape/Trend pillar held up because SPY and QQQ were both already sitting in Neutral, so this inputs score remained unchanged. By design, neither index can flip to a downtrend while above their 200-day SMAs. The rest of the Tape/Trend pillar weakened - breadth and the SPY weekly RSI were both lower, which brought the pillar score down 0.2 from last week.

Regime weakened slightly, due to the XLY/XLP ratio continuing down.

The Sentiment score was unchanged to one decimal place, as the VIX barely moved on the week.

The Macro/Monetary pillar score was also unchanged.

GICS Sector Relative Strength

Eight of the eleven sectors finished the week higher while SPY finished lower. Energy, industrials and healthcare all hold the Leading quadrant, with financials, utilities, materials and real estate in Improving.

But how long can this rotation carry the S&P 500 if technology continues to underperform? XLK is roughly a third of the S&P 500, and doesn’t include Alphabet, Amazon, Meta, Netflix or Tesla.

Communications was rallying and Discretionary holding in throughout early to mid-July. However, both had big falls on Thursday July 23 and are both negative year to date, down 10.0% and 8.9% respectively.

Momentum Leaderboard

Nine of the twenty are new, with Crude oil (USO) topping the board. Energy and commodity ETFs hold five of the top ten places, and even Broad Commodities (DBC) is heavily weighted to oil, gasoline and other distillates. Anti-Beta (BTAL) at number 4 indicate risk appetite is not high. China Large-Cap (FXI) and Hong Kong (EWH) also arrived on the board, placing in the top ten.

The banks (KBE & KRE), cybersecurity (CIBR), both software proxies (IGV & XSW) and retail (XRT) dropped off, as did Genomics (ARKG) after a run of six straight weeks. It was the only name that had been on the board every week since I started publishing it.

Trend States Across the Universe

Looking at the Trend States Board this weekend there was only a little shuffling around at the aggregate level of Uptrend, Downtrend and Neutral States.

Industry Breadth

One change to this board, which I introduced last weekend. I have decided to rank it by the average of the percentage of each industry’s names above their 20 and 50-day SMAs, rather than by weekly return.

At the top end, integrated oil, electric utilities, property and casualty insurance, REITs and oil refining all have 100% of names above both SMAs.

Financials continue to look healthy. Regional banks, investment banks and investment managers all have every name above the 50-day, but fewer above the 20-day.

Biotech is holding reasonably well after the recent pullback, with 80% of names still above their 50-day SMAs.

Noticeably, no technology industry appears until you reach the bottom third of the board and all nine of them sit there.

Semis at a Crossroads

Mid-week it looked like SMH was going to play out another failed head and shoulders “top”. After a shakeout below the AVWAP from the March 30 low, on Friday July 17, and a strong start to last week, it had reclaimed the neckline of the H&S pattern and looked ready to push higher. However, it stalled under its 20 and 50-day SMAs on Wednesday and rolled over on Friday, closing just above the AVWAP, with the 20-day now under the 50-day SMA. I’m watching 536 and 592 as important levels.

SMH Chart

Levels I’m Watching on the Dollar Index and TLT

The US dollar is in a Strong Uptrend and is a potential headwind if it continues higher. I am watching 100 and 101.50 - a break higher will likely be a negative for equities. If it stays in the range or breaks lower, I would read that as a positive.

DXY Chart

TLT closed the week about half a percent above its May low (82.77). If that level breaks and yields push over 4.75-4.8% towards 5%, it will be another tick in the bearish column.

TLT Chart

Follow-Up on Last Week’s Names

Last weekend I wrote that Dell (DELL), AMD, Cisco (CSCO) and Astera Labs (ALAB), which I had pointed out the previous week had held up well, all broke down (only Dell closed the week above its 50-day SMA), and that was itself a warning. However, last week Dell and AMD recovered. CSCO and ALAB are now off my watchlist.

DELL Chart

Dell rose 10.4% and is back above its 20 and 50-day SMAs.

AMD Chart

AMD bounced hard Monday through Wednesday reclaiming its 20 and 50-day SMAs. However, Friday’s 3.3% fall put it back below its 20-day and below the prior three days’ lows, taking off some of the shine. Some tight consolidation for a bit here, before an eventual breakout would be very constructive and potentially offer a low-risk entry.

New Names on the Watchlist

These all come from the same universe as the Industry Breadth board. That is stocks from the Russell 1000 and Nasdaq 100 that have outperformed the Nasdaq 100 over the prior twelve months. I went through the charts and picked out names showing relative strength, still close to all-time highs (HPE and TIGO aside) and potentially in a position to buy this week; so in an uptrend, above their 50-day SMA and preferably 20-day SMA, but not extended from it. Honestly, there weren’t a lot of names that met those criteria and had a chart I liked. And about half will report earnings within 9 trading days, so practically they aren’t good entries because they’re unlikely to gain enough in that time to have enough cushion to hold through earnings. Also, other than HPE they are all lower ATR% names, in the 2-4% range. This isn’t necessarily bad depending on your trading style and risk tolerance, but I generally prefer names with some juice. It also is a sign of current market conditions that the higher-ATR fast movers are mostly absent from my watchlist.

I have tried to be as specific as I can to show you how I consider potential entry levels. But I started writing this and annotating the charts over the weekend in Australia and will post it now as the US market opens on Monday. So, I need to be fluid, especially given the fast news cycle regarding Middle East hostilities. But it helps me to write out my analysis and ponder over the charts, and gives me a record of my thinking over time. This is not an easy market to swing trade, with few stocks trending smoothly above their moving averages, so I am being cautious and flexible, and will continue to be so until the market and individual names start trending smoothly again.

HPE Chart

BNY Chart

JBHT Chart

VIK Chart

RPRX Chart (reports August 5)

TRGP Chart (reports August 6)

TIGO Chart (reports August 6)

ATI Chart (reports August 6)

The Week Ahead

The Market Temperature is in Cautious and SPY and QQQ consolidating their big April/May gains, which is normal behaviour. However, for short/medium term swing trading - at least the way I trade - conditions are not favourable. So for me, that means less is more and I’m more focused on capital preservation right now. I didn’t put on any new swing trades last week. I may do this week, but if they get stopped out quickly, that’s valuable feedback telling me the time is still not right to get aggressive.

I have laid out some levels I’ll be watching this week. One or two data points alone won’t change my bias - which is neutral now. But if they all go one way and the future Market Temperature confirms what price is telling me, I can act with confidence within my process. To recap the markets and levels - SMH, specifically 536 and 592. QQQ holding its AVWAP from the March 30 low. TLT May 19 low of 82.77 and the US dollar Index levels 100 and 101.50.

Credit spreads and the MOVE Index show no stress yet. But in my model, both use multi-week lookbacks and I only calculate the Market Temperature once a week, so I’ll be monitoring those in real time as well.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

SPY closed the week below its 20 and 50-day SMAs, dropping its trend state to Neutral. If it breaks down below Friday’s low and 739, I wouldn’t be surprised to see a test of the 725 area, which would also line up at or near the rising AVWAP which currently sits around 721.5, and will continue rising over the coming days and weeks.

QQQ Chart

QQQ looks significantly weaker than SPY. It closed about 3% below its 20 and 50-day SMAs and only slightly above the AVWAP from the March 30 low. Bulls want to see this level hold. A significant break below this AVWAP could see a test of the 200-day SMA, which currently sits at around 641 and rising. I’m not predicting that will happen, but the AVWAP sits only around 6.5% above the 200-day SMA, and the rally off the March 30 low was fast and furious, so a fast retracement is a genuine possibility to be aware of.

Market Temperature

The Market Temperature fell to 4.6 from 5.7, dropping out of the Goldilocks Zone and into Cautious for the second time in four weeks.

The Tape/Trend pillar did most of the damage. Both the S&P 500 and the Nasdaq 100 dropped from Strong Uptrends to Neutral. The S&P 500’s weekly RSI eased to 60.2 from 65.1, and breadth softened - 56.8% of US stocks above their 50-day moving average, from 58.4%, and 57.3% above their 200-day, from 57.9%.

The Regime pillar also weakened. The discretionary vs staples ratio (XLY/XLP) continued lower, and high beta vs low volatility flipped from risk-on to neutral. Growth vs value still scores in value’s favour.

The VIX rose to 18.8 from 15.0, which the model reads as a contrarian positive, and the Monetary/Macro score was unchanged to one decimal place.

GICS Sector Relative Strength

The Change column shows the shift from the prior week's quadrant.

Momentum Leaderboard

Twelve of the twenty names are new this weekend - the energy complex, the banks, healthcare and retail arriving, while the tech and AI cohort that rejoined last weekend dropped off after a single week, along with Bitcoin and the biotechs.

The new Weeks column shows how long each name has held its place. Genomics (ARKG) is the only one that’s been on every board since I started publishing it six weeks ago, with Cybersecurity (CIBR), equal-weight software (XSW), Insurance (KIE) and Pharmaceuticals (XPH) at four straight weeks.

Two notable things worth pointing out are Anti-Beta (BTAL) at #1 on the board - a fund that shorts high beta. But BTAL is still just a bounce in a massive downtrend, and the same goes for VIX short-term futures (VIXY), whose RS-Momentum jump was the largest of any ETF I track - it’s a product that bleeds value over time through futures roll costs. I would not trade either of these products, but their appearance on the leaderboard is interesting.

Trend States Across the Universe

The number of ETFs in an uptrend state fell from 65 to 49 - nineteen dropped out and only three moved up into one.

Industry Breadth

This new graphic takes every stock in the Russell 1000 and Nasdaq 100 that has outperformed the Nasdaq 100 over the past twelve months - 367 of them as of July 17 - groups them by industry and shows how the median stock in each group did and what percentage of the group are above their moving averages.

The five weakest industries are all AI and electronics related. Semiconductors, electronic components and electronic production equipment finished the week with not a single name above its 20-day SMA. At the other end, regional banks and property and casualty insurance have every name above both the 20 and 50-day, and major pharmaceuticals 88% and 94%.

Follow-Up on Last Week’s Names

Last weekend I mentioned Dell (DELL), AMD, Cisco (CSCO) and Astera Labs (ALAB) as names holding up relatively well. However, all four broke down last week, which is itself a warning.

ALAB Chart

ALAB ended the week roughly 40% off its June 30 high and closed below its 20 and 50-day SMAs.

CSCO Chart

Cisco also closed below its 20 and 50-day SMAs.

AMD Chart

AMD lost its 20-day and closed just below its 50-day SMA.

DELL Chart

Dell held up better than the others - still holding its 50-day SMA.

The Week Ahead

The temperature is back in Cautious, and while one week here is close to a coin-flip historically, the absence of a short-term trend in SPY and QQQ tells me to be patient. Last week I didn’t put on any new swing positions - all I did was day trades, mostly shorts on Thursday and Friday.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

SPY held its 50-day SMA on Wednesday during the midweek pullback and finished the week strongly, closing less than 1% from an all-time high.

QQQ Chart

QQQ closed below its 50-day SMA on Tuesday and failed to reclaim it on Wednesday, despite having a strong day after the initial gap down. But it also finished the week strongly, closing just back above its 20-day SMA, and is back in a Strong Uptrend.

Market Temperature

The Market Temperature came in at 5.7, up from 5.6, holding in the Goldilocks Zone. On the surface almost nothing changed. Underneath, the pillars mostly offset each other.

The Tape/Trend pillar firmed. The QQQ moved from an Uptrend back to a Strong Uptrend and the SPY’s weekly RSI rose to 65.1 from 62.7. Breadth eased slightly, with 58.4% of US stocks above their 50-day moving average, from 59.4%, and 57.9% above their 200-day, from 59.1%.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) continued to turn up. High beta vs low volatility remains risk-on, and growth vs value still scores in value’s favour - though growth outperformed on the week itself, with Russell 1000 Growth (IWF) up 2.3% and Value (IWD) flat, but the ratio is still below its moving averages, so the model’s signal hasn’t flipped.

Sentiment and Monetary/Macro went the other way. The VIX fell to 15.0 from 15.8, which the model reads as a contrarian negative. Bond volatility edged up, with the MOVE index at 69.6 from 65.4, and the dollar ticked higher.

GICS Sector Relative Strength

Technology (XLK) is back in Leading, up 2.9% on the week, after spending two weeks in Weakening. It’s the only sector there. Industrials (XLI) crossed out of Leading into Weakening after a 1.1% decline.

Financials (XLF) is the only sector in Improving, up 0.2% on the week.

The other eight sectors are all in Lagging. Health Care (XLV) fell 1.8% and dropped out of Improving, as did Discretionary (XLY), up 0.1%, and Communications (XLC), despite being up 1.9%. Energy (XLE) was the strongest sector on the week, up 3.5%, but remains in Lagging with its RS-Trend just under the 100 line. Materials (XLB) fell 2.2%, Staples (XLP) 1.0%, Utilities (XLU) 0.8% and Real Estate (XLRE) 0.5% - all remaining in Lagging.

Momentum Leaderboard

There are eight new names on the board this weekend. Ethereum (ETHA) now tops it, with Bitcoin (IBIT) and China Internet (KWEB) also on the board, but all three are still in downtrends and a long way off their highs.

Technology (XLK), Cloud & Storage (FCLD), AI & ML (THNQ), Internet (FDN), the equal-weight Nasdaq 100 (QQEW), FANG+ (FNGS) and IPOs (IPO) all rejoined the board. XLV fell off the board, but healthcare sub-sectors - ARK Genomics (ARKG), Biotech (XBI), Pharmaceuticals (XPH) and large-cap biotech (IBB) are all still there, as are equal-weight financials (RSPF) and Insurance (KIE).

Trend quality improved. Thirteen of the twenty are in Strong Uptrends, up from nine last week, and only three - ETHA, IBIT and KWEB - are in downtrend states.

Still no semiconductor names on the board for a third straight week. SMH and XSD have RS-Momentum readings of 99.4 and 97.0.

Trend States Across the Universe

Something new I’ll be tracking each week - the count of all 121 ETFs in my universe by trend state.

The reason I want to track this: the quadrant map narrowed last week. Lagging went from 40 names to 62, because most things lost ground against a strong SPY week. But the absolute picture barely moved - 65 names are in one of the three uptrend states versus 63 the week before. The narrowing is relative, not a breakdown in underlying trends.

China and Crypto Bounce - Within Downtrends

China Internet (KWEB) rose 5.6% and China Large-Cap (FXI) 4.9%, with FXI crossing into Improving to join KWEB. Bitcoin (IBIT) rose 3.9% and Ethereum (ETHA) 5.2%. KWEB, FXI and IBIT all upgraded from Strong Downtrends to Downtrends, and ETHA was already there. All four are still a long way underwater - IBIT and ETHA sit roughly 50% and 63% below their all-time highs.

Tech, Semis and AI Bounce

Mega-cap tech was strong, as seen in FANG+ (FNGS). It’s still in a Recovering Uptrend, but another strong week would likely flip it to a Strong Uptrend.

FNGS Chart

Semiconductors (SMH) rose 3.2% and sits above its rising 50-day SMA, though still below its 20-day. Equal-weight semis (XSD) added 1.4% but looks the weaker of the two.

SMH Chart

XSD Chart

Generative AI (CHAT) rose 3.3% after holding the AVWAP from the March 30 low, which is where I said last weekend I’d be watching for a bounce.

CHAT Chart

The RS-Momentum moves across the AI complex were the biggest of the week. CHAT went from 90.5 to 99.1, Digital Infrastructure (IDGT) from 91.0 to 99.0, Data Center Infrastructure (DTCR) from 89.0 to 95.6 and SMH from 92.9 to 99.4. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, had the biggest RS-Momentum gain of any ETF I track, from 79.4 to 94.9 after a 4.3% week, but still looks weak, with price unable to close above the AVWAP from the March 30 low. None of them have crossed back above 100 yet. Re-accelerating, but not yet outperforming SPY on RS-Momentum.

WGMI Chart

Healthcare Slides and Biotech Hit on Friday

XLV was weak and dropped out of Improving, while equal-weight healthcare (RSPH), which was on the all-time-high list a week ago, fell out of Leading - both now sit in Lagging.

XLV Chart

Biotech’s weekly numbers hide the story. XBI finished the week down only 0.9%, but 3.2% of that came on Friday - an ugly candle after the run it’s had since mid-June. Large-cap biotech (IBB) fell 1.9% and ARK Genomics (ARKG) 3.7%. Pharmaceuticals (XPH) was up 1.9%.

XBI Chart

Aerospace & Defense Rejected at ATHs

A week after crossing into Leading and sitting 2.7% from an all-time high, Aerospace & Defense (XAR) fell 5.6% and now sits in Lagging. Its trend state went from a Strong Uptrend to Neutral, and its RS-Trend fell more than 8 points.

XAR Chart

Financials Stall

Last weekend Insurance (KIE), equal-weight financials (RSPF), Financials (XLF) and Capital Markets (KCE) were all on the momentum leaderboard. Last week XLF rose 0.2%, RSPF 0.6%, KCE 1.7%, and KIE fell 1.0% - only equal-weight financials and insurance retained their place on the leaderboard but dropped nine and fourteen places respectively.

All six financial ETFs we track lost RS-Momentum. The big banks (KBE) were up 0.2% and the regional banks (KRE) finished flat, but both dropped out of Leading into Lagging, sitting right on the boundary.

Despite the slowing momentum, all six remain in Strong Uptrends. The big banks kick off earnings season on Tuesday next week.

KBE Chart

The Week Ahead

The temperature is steady in the Goldilocks Zone, SPY and QQQ are back above their 20-day SMAs in Strong Uptrends. However, both are still consolidating in a range and lack shorter term trend direction. The rotation swung back towards tech and AI names; I will be watching next week to see if that continues. I scaled out of my biotech (XBI) position and sold Eli Lilly (LLY) last week but would buy them back if they can consolidate here for a bit, or even on some strength after a deeper pullback to their 20 or 50-day moving averages. I am waiting for SPY and QQQ to resolve from their consolidations before aggressively entering new positions. I did enter the S&P 500 CFD on Monday, as I mentioned last weekend, but did not hold through Tuesday and Wednesday’s pullback. A few individual names I’m watching that have held up relatively well are Dell (DELL), Advanced Micro Devices (AMD), Cisco (CSCO), and Astera Labs (ALAB).

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

However, the weekly numbers hide how the picture changed mid-week.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

Monday and Tuesday were strong. The SPY reclaimed its 20-day SMA on Tuesday and held above it into Thursday’s close - but the back half of the week the relative strength was concentrated in financials, healthcare, and some of the FANG+ mega-cap names.

QQQ Chart

The QQQ looked the better of the two mid-week, with a strong Tuesday close above its 20-day SMA. However, the selling kicked in on Wednesday with a gap down and close near the lows, and continued on Thursday, falling 1.7%, with the losses concentrated in the semiconductor and AI names. SMH fell 4.5% on Thursday alone and equal-weight semis (XSD) 6.7%. The QQQ finished the week back below its 20-day SMA, sitting just above its 50-day.

Market Temperature

The Market Temperature rebounded to 5.6 from 4.7, moving back into the Goldilocks Zone after a single week in Cautious. Last weekend I wrote that a single week in Cautious is close to a coin-flip, and that it’s sustained weakness below 4.0 that has historically mattered.

The recovery came mostly from the Tape/Trend pillar. The S&P 500 went from Neutral directly back to a Strong Uptrend, the weekly RSI rose to 62.7 from 58.4, and breadth improved for a second week - 59.4% of US stocks are above their 50-day moving average and 59.1% above their 200-day.

Monetary/Macro also firmed. The dollar pulled back after several strong weeks, bond volatility eased with the MOVE index at 65.4, and credit spreads tightened.

The Regime pillar improved as the discretionary vs staples ratio (XLY/XLP) turned back up. High beta vs low volatility remains risk-on, and growth vs value still favours value, both unchanged.

Sentiment was the only pillar to fall. The VIX dropped to 15.8 from 18.4, which the model reads as a contrarian negative.

GICS Sector Relative Strength

Only Industrials (XLI) sits in Leading after a 1.5% week. Technology (XLK) held in Weakening on a flat week. Discretionary (XLY) was up 2.4%, and Communications (XLC) 3.2%, both crossed up from Lagging into Improving, joining Health Care (XLV), up 2.1%, and Financials (XLF), the strongest sector on the week, up 3.8%. Materials (XLB), up 0.8%, and Real Estate (XLRE), down 1.2%, dropped out of Leading, while Utilities (XLU), down 1.0%, and Staples (XLP), up 0.3%, slipped out of Improving - all four into Lagging. Energy (XLE) fell 1.2% and went from Weakening into Lagging.

Momentum Leaderboard

There are nine new names on the board this weekend. The healthcare and biotech leadership held its ground. ARK Genomics (ARKG) still tops the board, with Biotech (XBI), large-cap biotech (IBB) and Pharmaceuticals (XPH) all in the top dozen and all in Strong Uptrends.

Three of the new arrivals are financials - equal-weight financials (RSPF), broad financials (XLF) and Capital Markets (KCE) - joining Insurance (KIE), which sits second on the board after a 5% week. There are no semiconductor names on the board for a second week. Trend quality is much the same as last week, with nine of the twenty in Strong Uptrends and four in downtrend states.

All-time Highs

The Dow (DIA), Insurance (KIE), Russell 1000 Value (IWD), Health Care (XLV), equal-weight healthcare (RSPH), Pharmaceuticals (XPH), large-cap biotech (IBB), equal-weight financials (RSPF), and the equal-weight S&P 500 (RSP) all finished the week within 0.4% of all-time highs.

DIA Chart

IWD Chart

XLV Chart

IBB Chart

Semis and AI Names Down, Software Up

Semiconductors (SMH) fell 3.2% on the week and equal-weight semis (XSD) 2.8%. Generative AI (CHAT) fell 5.2%, Data Center Infrastructure (DTCR) 7.2% and AI Innovation (BAI) 4.3%. Crypto miners (WGMI), which mostly trade as an AI compute proxy now, fell 19.1% - the worst week of any ETF I track. Bitcoin (IBIT) and Ethereum (ETHA) rose 3.0% and 8.2% for the week and both made the Momentum Leaderboard. However, they remain in severe downtrends, still more than 50% and 65% below their all-time highs.

SMH Chart

XSD Chart

CHAT Chart

WGMI Chart

IGV rose 6.1%, despite that ETF containing many of the crypto miner names. Equal-weight software (XSW) was up 5.3%, and cybersecurity (CIBR) 6.2%, back in a Strong Uptrend. IGV is still in a Downtrend, 3.6% below its 200-day SMA. XSW doesn’t look as bad, above its 200-day, but I’m not looking to trade them until their moving averages align bullishly.

IGV Chart

CIBR Chart

Financials - Insurance and Capital Markets Lead

Within financials, the strength was in insurance and capital markets rather than the banks. KIE rose 5.0% and KCE 3.9%. The banks looked good until Thursday, when both KBE and the regional banks (KRE) sold off to finish the week roughly flat - KBE up 0.3% and KRE down 0.2%.

KIE Chart

Rates Up, Rate-Sensitives Down

Treasury ETFs fell across the curve, with the 20+ year (TLT) down 2.1%, and every fixed income ETF I track dropped from Improving into Lagging. The rate-sensitives went with them. Utilities and Real Estate lost RS ground, as mentioned above, and the homebuilders were hit harder - Home Construction (ITB) fell 1.9% and Homebuilders (XHB) 2.7%, both dropping out of Leading.

TLT Chart

Aerospace, Defense and Space

Aerospace & Defense (XAR) rose 4.9%, crossed into Leading and is now in a Strong Uptrend, only 2.7% from an all-time high. ARK Space (ARKX) rose 6.1%, also crossing into Leading.

XAR Chart

The Week Ahead

The temperature is back in the Goldilocks Zone and the SPY returned to a Strong Uptrend, but the leadership picture is very different to what we have seen for most of the year. The names at all-time highs are healthcare, financials, value, and the Dow. I will be watching the semi and AI ETFs next week to see if they can hold around their 50-day SMAs and/or AVWAP from the March 30 lows. That would be a logical place for a bounce, but I’m not in a hurry to add back individual stock exposure until it becomes clearer the volatility has settled. I was stopped out of Teradyne (TER) on Thursday, which was the last remaining position I held in AI-related stocks. Currently, my only positions are in XBI and Eli Lilly (LLY). I am considering entering a new position in the S&P 500 index CFD on Monday with a stop under last Thursday’s low and the 50-day SMA, which sits just below that. If semi and AI names bounce next week, I may look to play that through the Nasdaq 100 index CFD. However, if the pullback continues, I will monitor for stocks holding up and showing relative strength for my watchlist.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day, and the red is the 200-day. The thick black line is the AVWAP from the March 30 low.

After Monday’s failure and Tuesday’s gap down, the chart has a very different look compared to last weekend. Friday’s low bounced right at the AVWAP from the March 30 low. However, I want to see it regain the 20-day SMA, which sits at 743.60 as I write this, before getting bullish again.

On the other hand, if we are to have another leg down, I would be looking at the 690 to 695 zone, which is the convergence of the rising 200-day SMA and the prior highs from January and February this year, as potential support.

QQQ Chart

The QQQ looks stronger than the SPY. It’s still holding its 50-day SMA for now. But as with the SPY, I will be waiting for a reclaim of the 20-day SMA, which currently sits at 724.76, before getting bullish or aggressive. If we get a flush lower and undercut the June 9 low, I would be looking at the AVWAP as potential support. If it could undercut and then rally from there, that may be the reset needed before a new leg up. But if it were to continue lower, I would be looking at the 632 to 637 zone, which is the convergence of the 200-day SMA and the prior highs in October last year and January this year.

FNGS Chart

FNGS is the ugliest chart of the three. Friday’s candle undercut the AVWAP and closed positive, but it still has a lot of work to do to get back above its 50-day SMA and declining 20-day SMA. There’s potential support not far below at the 200-day SMA, which currently sits at 68.78, but if it loses that, the chances of a more substantial drawdown in the SPY and QQQ would increase significantly.

Market Temperature

The Market Temperature fell to 4.7 from 5.7, dropping out of the Goldilocks Zone and into Cautious. That’s a full-point fall, which is very uncommon. In the ten-year backtest of the model, a one point or greater weekly drop only happened in around 7% of weekly observations.

The majority of the drop came from the Tape/Trend pillar. The S&P 500 lost its uptrend and slipped to Neutral, and the Nasdaq 100 dropped from a Strong Uptrend to an Uptrend. The S&P 500’s weekly RSI fell to 58.4 from 66.3. Breadth, though, went the other way: the share of US stocks above their 50-day moving average rose to 58.1% from 53.1%, and the 200-day count to 58.2% from 55.0%.

On the Monetary/Macro side, the dollar had another strong week and remains in a Strong Uptrend. Bond volatility ticked up slightly, with the MOVE index at 66.8, and credit spreads widened a touch, though both stayed at relatively low levels.

The Regime pillar also eased, on the back of the discretionary-to-staples ratio (XLY/XLP) turning lower; the high-beta and growth-versus-value signals were unchanged.

Sentiment was the only pillar not to drop on the week. The VIX rose to 18.4 from 16.8, which the model reads as a contrarian positive.

A word on the interpretation of a Cautious reading. A single week in Cautious is the model’s least reliable signal. In backtesting, the 4-5 band is the one zone that flipped sign out of sample, so one week here is close to a coin-flip. The reading that really mattered is sustained weakness below 4: when the temperature stayed below 4.0 for two weeks or more, a genuine drawdown has followed around nine times out of ten, while a one-week dip that recovers has almost always been noise. So caution is warranted and I will trade accordingly. However, the next few weeks will be telling.

GICS Sector Relative Strength

There were some very notable changes to the RS map last week. Technology (XLK) fell 5.4% and dropped out of Leading into Weakening.

Communications (XLC) fell 3.0% and Discretionary (XLY) 2.4%.

The genuine strength was in the defensives: Health Care (XLV) was the standout, up 7.3%, with Utilities (XLU) and Real Estate (XLRE) up around 3% each and Staples (XLP) up 1.7%.

One caveat in reading the map, though: with the S&P 500 down 2.4%, a sector only had to fall less than the benchmark to gain ground against it. Materials (XLB) crossed into Leading while finishing the week down, so some of the broadening is relative rather than absolute strength.

Momentum Leaderboard

The leaderboard looks very different than it did last weekend. Thirteen of the twenty names are new, and the entire semiconductor and AI cohort that had been consistently dominating it dropped off - the only tech-related name still on the board and in an uptrend is cybersecurity.

Six of the top nine are now healthcare or biotech, led by ARK Genomics (ARKG) up over 12% and Biotech (XBI) up over 10%, with Pharmaceuticals (XPH) and large-cap biotech (IBB) close behind. Homebuilders, real estate, insurance and the regional banks are also in the top 20.

The quality of the leadership is worth noting, though. A week ago, sixteen of the top twenty names were in Strong Uptrends. Now only nine are, with a handful - software, water, medical devices, natural gas - sitting in downtrend states.

The Week Ahead

What stands out most is how much the picture changed in five days. Not just the one-point drop in the market temperature, but the price action on the charts throughout the week. Going into Monday the Nasdaq 100 looked ready to break out to new all-time highs. I was long and preparing to add more exposure during the week. However, on Monday, before reaching an all-time high, the QQQ reversed and closed lower on the day. Then there was the large gap down on Tuesday. Thursday’s gap up rejected right at the declining 20-day SMA. Friday’s close was weak and only just above the 50-day SMA. The SPY was even weaker. For these indices to recover and make new all-time highs, the mega-caps need to stop falling. Since they carry such a heavy weighting in the SPY and QQQ, even with a broadening out, I don’t think the other sectors are large enough to carry the indices to new all-time highs.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

FNGS Chart

Market Temperature Up to 5.7

The Market Temperature rose to 5.7 from 5.3 and held in the Goldilocks Zone. The lift came entirely from the Tape/Trend pillar. The QQQ flipped back into a Strong Uptrend, while the S&P 500 held its Uptrend, finishing right on its 20-day SMA rather than above it. The S&P 500’s weekly RSI also edged up to 66.3 from 65.1 - a small move week-on-week, but the model has a 2-week lookback window, so it gave the score a bigger lift. Breadth held roughly steady, with the share of US stocks above their 50-day moving average easing only slightly to 53.1% from 56.6% and the 200-day count flat near 55%.

On the Monetary/Macro side, bond volatility compressed further, with the MOVE index down to 65.4 from 69.4. The US dollar had a strong week, which the model reads as a drag. I’ll be watching the dollar closely over the week ahead. If it keeps moving up strongly, it could cause some headwinds for equities.

Sentiment stayed a small negative: the VIX eased to 16.8 from 17.7, which the model treats as a contrarian signal. The Regime pillar score held steady, unchanged from last week.

DXY Chart

GICS Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK), up 3.6%, and Industrials (XLI), which crossed in from Weakening after a 2.7% week. Two sectors sit in Improving, Financials (XLF) and Discretionary (XLY), and none are in Weakening.

That leaves seven in Lagging. Materials (XLB) dropped out of Leading after leading the week before, and Real Estate (XLRE), Staples (XLP) and Health Care (XLV) all slid from Improving to Lagging. Energy was the softest sector, with XLE off 6.6%.

Momentum Leaderboard

Tech and AI names dominate the top 20 again, with Taiwan (EWT) and Korea (EWY) the only international names to make it.

Tech & AI Related Names Resume Their Outperformance

SMH rose 6.4%, its second strong week running, and equal-weight semis (XSD) 5.0%, both in Strong Uptrends and sitting at or near their highs.

SMH Chart

XSD Chart

ARK Genomics (ARKG) jumped over 10% but is still a long way off its prior all-time highs.

The new-issues ETF basket (IPO) had another big week and still sits second on the table.

QTUM is on the verge of a breakout to all-time highs.

Crypto miners (WGMI) sit in fifth place again, even though Bitcoin (IBIT) and Ether (ETHA) are both in Strong Downtrends - most crypto miners trade as an AI proxy now.

WGMI Chart

Biotech firmed too. XBI is back in Leading and has finally broken out of the range it’s been in since mid-April.

The Nasdaq Next Gen 100 (QQQJ) looks like it might be ready to make another run: Leading, in a Strong Uptrend, and within 2.5% of its all-time highs.

The Banks Stall Out

The banks stalled out right at their recent highs. I posted on X midweek about the bearish engulfing candles on the S&P Bank ETF (KBE) and the Regional Banking ETF (KRE).

By Thursday’s close it had fed through to the relative strength. KBE slipped from Leading to Lagging and KRE from Leading to Weakening. Broad financials (XLF) held positive on the week but printed a bearish engulfing candle on Thursday.

KBE Chart

KRE Chart

XLF Chart

The Week Ahead

The Market Temperature is up slightly to 5.7 and the QQQ reclaimed and held its 20-day SMA, so I’ll be looking to add more exposure this week, primarily in tech and AI names and probably through ETFs and Nasdaq 100 CFDs, as most of the leading AI names have very high ATRs and the individual stock positions I’ve currently got on don’t have enough of a cushion yet for me to add new positions aggressively. I also like XBI here and bought the breakout on Wednesday.

I’ll update and post my This Week’s Trading Plan later tonight, if I have time, or tomorrow, Melbourne time.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

In my June 3 update I had four positions on - CIEN, HUT, MKSI and KLAC. Three are now closed and one’s still running. Here’s what happened.

CIEN - stopped out at $607.23 on June 3, the same day that update went out. I’d moved my stop up to $607.50 ahead of earnings and it pulled back and stopped me out. +8.5% on the trade. It had a very negative reaction to the earnings and price has continued lower since then - it closed at $446 on Friday June 12.

HUT - moved my stop to $117.85 to lock in some profit after an ugly looking daily candle on Tuesday June 2. Stop got hit on June 5 at $117.31. +3.4% in the end - but I never let a decent winning trade turn into a loser and the stop served its purpose here.

MKSI was a loss. During the June 5 selloff my stop was hit and I exited at $305.52, down 8.2% from my $332.82 fill.

KLAC I am still in but took half off on Friday June 12 in the pre-market. KLAC did a 10-for-1 split on June 12, so I got 10 shares for each 1 held - same position, just 10 times the number of shares at a tenth the original price. I took half off at $239.45 for a touch over +22%, which was 2.4R (2.4 x my original risk on the trade). The other half is still running with the stop up at breakeven, $196.01. It closed on Friday around $253.

On the daily charts, the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

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The plan for the week ahead

I put out my Market Temperature piece earlier today. The short version: strength broadened out last week across semis, small caps, cyclicals and international, but the SPY and QQQ still haven’t reclaimed their 20-day SMAs. I want to see the indices reclaim this moving average before I get aggressive with new positions.

So, this is a plan for how I’ll approach the week without a list of exact entries. There’s event risk over the weekend, with the potential signing, or non-signing, of the MOU between the US and Iran. No point suggesting precise entry levels on a Sunday night (Melbourne time) when these names could gap significantly in either direction. However, I know where my stops will be if I enter.

Here’s how I’m thinking about it. If there’s an agreement and the market starts running when the futures open, I’ll take a position in the Nasdaq 100, through CFDs (contracts for difference), which are available in Australia. I use them for a lot of my short-term and swing trading. I’ll be looking to enter on a break back above the 20-day SMA. That gets me in without waiting for the US market to open. And because they basically trade 24/5, I can manage risk more tightly and take a larger position.

For the individual stocks, I’ll watch the pre-market Monday without committing to a specific entry level in advance. If nothing happens over the weekend and stocks are opening a little up or down with no breakout and no severe gap down, I’m considering taking some early entries in half position size before a breakout, then leaving a resting buy stop order for the second half, probably with a tighter stop on the second piece. If it looks like there will be a severe gap down on the US open - I’m not interested and will patiently wait it out.

The names below all held up well through the early-June pullback and are consolidating near all-time highs or already making new ones.

The names

Teradyne (TER) - automated test equipment for semiconductors and electronics. Weakening, Strong Uptrend. Up 12.7% last week (week ending June 12). 9.4% above the 20-day SMA (1.4x ATR), 6.9% ATR. 4.5% below its all-time high. RSI 58.

Consolidating since making an all-time high at the end of April. Volatility is contracting and it’s making higher lows. My stop would sit below $356.60, under the 20 and 50-day SMAs and the low on Thursday, June 11.

Semtech (SMTC) - analog and mixed-signal chips. Leading, Strong Uptrend. Up 10.4% last week. 7.9% above the 20-day SMA (1.0x ATR), 7.7% ATR. 3.3% below its all-time high. RSI 62.

Consolidating since late May. Had a shakeout under the 20-day SMA on Tuesday, June 9. My stop would sit under $150, below the 20-day SMA, if buying on a breakout. If I take an early entry, I’ll use $143.61 to give it a little more room.

DigitalOcean (DOCN) - cloud infrastructure for developers. Weakening, Strong Uptrend. Up 0.3% last week. 4.2% above the 20-day SMA (0.5x ATR), 7.7% ATR. 7.6% below its all-time high. RSI 61.

Consolidating tightly since the earnings gap up on Tuesday, May 5. It’s held its 20-day SMA the whole time, other than a shakeout on Tuesday, June 9, where it breached it during the trading session but closed back above it. I’m strongly considering an early entry in half size on this one. If I do, my stop will probably sit under $148.23, the low from Thursday, May 28, although I may use a tighter stop under $153.71 - the shakeout low on Tuesday, June 9 - depending on the entry price.

Western Digital (WDC) - hard drive and flash storage maker. Weakening, Strong Uptrend. Up 10.0% last week. 8.7% above the 20-day SMA (1.4x ATR), 6.2% ATR. 6.6% below its all-time high. RSI 61.

Trending beautifully for over a year. During the recent pullback, it undercut its 20-day SMA but recovered strongly last Thursday and Friday. My stop would sit under $480.87, the pivot low from the recent pullback.

On watch - the steel names

Two steel names I’m watching. After a strong week for materials (XLB), I flipped through all the individual stock charts and these two stood out. Both finished last week at all-time closing highs, but they’re the most extended names on my list. I’d want a pullback or some tightening first, or maybe just use a tight stop - though entering here with the tighter stop is a lower-probability trade.

Nucor (NUE) - steelmaker. Lagging, Strong Uptrend. Up 4.7% last week. 8.4% above the 20-day SMA (3.0x ATR), 2.8% ATR. 0.9% below its all-time high. RSI 73.

It’s a bit extended at 3.0x ATR. If I do enter, my stop would sit under $252.69, or $245.33 below the 20-day SMA and the shakeout low on Tuesday, June 9.

Steel Dynamics (STLD) - steel and aluminium producer. Improving, Strong Uptrend. Up 5.3% last week. 10.2% above the 20-day SMA (3.3x ATR), 3.1% ATR. 1.1% below its all-time high. RSI 75.

The most extended name at 3.3x ATR. If I do enter, my stop would sit under $267.46, or $259.52 - the shakeout low on Tuesday, June 9.

Given the weekend event risk, I am open to anything next week, but I still find it helpful to have a clear plan. If things go badly, I will just step aside and wait for the dust to settle. The new Federal Reserve Chair Kevin Warsh is also scheduled to make his first press conference as Chair on Wednesday following the conclusion of the central bank’s two-day rate-setting meeting - adding even more uncertainty and risk to the week.

The four tech names are high-ATR, between 6 and 8%, so be careful and size accordingly if trading them and/or other similar names.

Stay open-minded and manage your risk carefully.

Cheers!

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

The small-cap Russell 2000 (IWM) rose 4%, microcaps (IWC) 4.4%, the S&P MidCap 400 (MDY) 2.8%, the equal weight S&P 500 (RSP) 1.8%, and Russell 1000 Value (IWD) 2.4%.

RSP, MDY and the small caps (IWM) closed at weekly all-time highs and are all in Strong Uptrends. SPY is still a touch below its 20-day SMA, the QQQ closed right on it. I want to see a daily close above their 20-day SMAs and the highs from Tuesday the 9th of June before assuming this pullback is over and getting more aggressive.

SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

IWM Chart

Market Temperature Ticks Up to 5.3

The Market Temperature came in at 5.3, a tick up from 5.2, and stayed in the Goldilocks Zone.

On the surface not much changed, but underneath, two pillars moved in opposite directions.

Sentiment was the biggest faller. The VIX dropped from 21.51 to 17.68. The model reads a falling VIX as a contrarian negative signal.

Monetary was the biggest gainer and offset the Sentiment drop exactly. Bond volatility (the MOVE index) came in from 75.20 to 69.36, and the US Dollar Index eased back below 100 to 99.80.

The Tape pillar firmed up a little. Breadth recovered on the week - the percentage of US stocks above their 50-day moving average rose from 49.55 to 56.58, and the percentage above their 200-day from 52.48 to 55.38. The SPY and QQQ trend states held at Uptrend and the SPY weekly RSI edged up from 64.04 to 65.06.

Regime barely moved. High beta (SPHB) outperformed low volatility (SPLV). Growth (IWF) underperformed value (IWD) again - discretionary (XLY) also underperformed versus staples (XLP).

GICS Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK), up 2.5% and still the strongest sector on a relative basis, and Materials (XLB), which crossed in from Lagging after a strong 3% week.

Five sectors sit in Improving: Staples (XLP) 2.9%, Financials (XLF) up 2%, Real Estate (XLRE) 1.5%, Discretionary (XLY) 1.5% and Healthcare (XLV) 0.5%. Discretionary moved up from Lagging, the other four held their place from the prior week.

Two sectors entered into Weakening. Energy (XLE) dropped out of Leading, down 0.2% and the softest sector on the week - crude (USO) fell nearly 6% - energy equities held up far better than the commodity itself. Industrials (XLI) slipped out of Improving despite a 1.2% week but sits right on the border.

That leaves Utilities (XLU) and Communications (XLC) in Lagging, with XLC the weakest sector on the board.

Leadership is thin at the top, but the Improving group is broad - a spread of cyclical, rate-sensitive and defensive sectors all carrying positive momentum.

XLB Chart

XLP Chart

XLF Chart

A Broadening at the Top

Fifteen of the top twenty names on my momentum leaderboard are new compared to the prior week.

Last weekend, after the Friday June 5 selloff, half of the usual growth leaders that have been dominating the board in recent times - crypto, cloud, software, AI, semis, solar - dropped off, replaced by healthcare, financials, insurance, real estate, the USD (UUP) and anti-beta. The defensive names are now gone, and the board is led by Airlines (JETS), then IPOs (IPO) and retail (XRT), with home construction (ITB), homebuilders (XHB) and the regional banks (KRE) and banks (KBE) all inside the top dozen. Semiconductors (SMH), equal-weight semis (XSD) and the AI names (QTUM, BAI), crypto miners (WGMI), along with Taiwan (EWT) and South Korea (EWY), have made a return to the top 20.

Airlines and retail at the top of the momentum board is not something I have seen in a long time. And most of these names are in uptrends, not just oversold bounces. A couple, home construction (ITB) and EW consumer discretionary (RSPD), are bouncing within a downtrend, but the remainder are in one of the three uptrend states.

This suggests things are risk-on and broadening. But it isn’t clear-cut. Staples (XLP) was the second-strongest GICS sector on the week, behind materials (XLB), and outperformed both the S&P 500 and discretionary (XLY). Growth (IWF) also lagged relative to value (IWD) for a second week running. We are getting conflicting signs regarding risk appetite.

Semis Bounce, Software Breaks Down

Inside tech, semis and software diverged massively last week. Semiconductors (SMH) rose 8.8%, one of the biggest weekly gains on the board, and is back in Leading. Equal-weight semis (XSD) added 6%. Both are in Strong Uptrends, sitting well above their 50-day moving averages, with three-month gains of 58% and 84%. The selloff barely dented their trend - over the past two weeks SMH is up 3.5% and XSD is about flat.

SMH Chart

Software (IGV) fell 5.4% last week, on top of a 5.7% drop the prior week - down nearly 11% over the fortnight. It dropped from Improving to Lagging and into a Downtrend, again below its 200-day SMA, after briefly getting above it in late May and early June. Equal-weight software (XSW) and internet (FDN) tell the same story, both down 6 to 7% over the two weeks and back in downtrend states.

The extreme weakness lies in the large SaaS names, which have lagged all year. Cyber and crypto miners continue to perform well, but not enough to hold up the IGV.

IGV Chart

International - Highs Abroad, China Left Behind

South Korea (EWY) and Taiwan (EWT) are the strongest names on the international board, up nearly 13% and over 4.5% respectively. Both dropped into Weakening during the selloff two weeks ago and both are now back in Leading, in Strong Uptrends. South Korea’s relative-strength trend is the highest of any international market I track, by some margin.

EWY Chart

International Developed (IEFA) and Japan (EWJ) are the quiet standouts. IEFA rose 2.5% on the week and Japan 2.2%, leaving IEFA within 1% of its all-time high and Japan within 2%, both in Strong Uptrends. Japan has moved up into Leading and IEFA into Improving.

IEFA Chart

On the flip side, China Large-Cap (FXI) and China Internet (KWEB) were up 1.6% and 0.4% on the week but are both in Strong Downtrends and Lagging - down 10% and 25% year-to-date and sitting 52% and 75% below their all-time highs. Hong Kong (EWH) was up less than 1% on the week and has held up better over longer time frames - up just over 1% year-to-date - but it is still Lagging and in a Downtrend.

KWEB Chart

Mixed Messages

Strength returned broadly across parts of AI, semiconductors, small caps, cyclicals and international markets. Internals expanded; Leading quadrant names went from 15 to 35, Weakening dropped from 31 to 20.

However, staples and value both outperformed, while mega-caps lagged. The SPY and QQQ are yet to reclaim their 20-day SMAs. I will be watching the futures when they open and want to see these indices reclaim this moving average before entering too many new positions. Later today I will put out a post with my trading plan for the week ahead, featuring some of the top stocks on my watchlist. They all held up well during the pullback and are consolidating near or already making new all-time highs.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

The Dow (DIA) was barely down at 0.2%, the S&P MidCap 400 (MDY) off 0.9%, the equal weight S&P (RSP) 0.5%, and Russell 1000 Value (IWD) 0.7%. The damage was concentrated in growth, the mega caps, small caps and speculative areas. The broad, value-tilted and defensive parts of the market held up far better.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

Market Temperature Drops to 5.2

The Market Temperature fell to 5.2 from 6.4, dropping out of Strong and into the Goldilocks Zone.

The Tape/Trend pillar suffered the most damage. Both the SPY and QQQ trend states downgraded from Strong Uptrend to Uptrend, the weekly RSI on the S&P came in from 72.97 to 64.04, and breadth weakened. The percentage of US stocks above their 50-day moving average fell from 58.88 to 49.55 and the percentage above their 200-day fell from 55.66 to 52.48.

The Regime pillar also softened as discretionary lost ground to staples and growth underperformed value.

On the Monetary/Macro side, the dollar firmed back above 100 on the US Dollar Index and bond volatility (the MOVE index) rose from 70.22 to 75.20.

The one pillar that improved was Sentiment - the VIX jumped from 15.32 to 21.51 - the model reads a rising VIX as a contrarian positive.

Friday’s Change of Character

A normal, healthy pullback in a strong trend tends to be more orderly - a few down days, drifting back toward the 20-day, buyers stepping in - Friday wasn’t that.

Many of the leading ETFs and the major indices sliced straight through their 20-day moving averages in a single session. By the close, 79 of the 121 ETFs I track were sitting below their 20-day. Of the names that had been in the Leading quadrant and dropped into Weakening last week, 14 of 15 finished below their 20-day.

The character of the selling matters more than the size of it. A 2.5% down week on the S&P 500 isn’t extreme on its own. But the speed and breadth of Friday’s move is the kind of thing worth respecting until the market shows you otherwise.

FNGS Chart

FNGS not only broke decisively through its 20-day SMA but also closed below its breakout zone.

XSD Chart

SPDR Sector Relative Strength

Only two of the eleven GICS sectors are in Leading: Technology (XLK) and Energy (XLE). Energy crossed in from Weakening after a 2.45% week - crude (USO) was up 3%.

Five sectors moved up into Improving, all from Lagging: Healthcare (XLV) up 2.4%, Real Estate (XLRE) 1.6%, Financials (XLF) 1.4%, Staples (XLP) 0.6% and Industrials (XLI) 0.6%.

The biggest weekly falls came from the growth-tilted sectors - Technology (XLK) -5.6%, Consumer Discretionary (XLY) -5.0% and Communications (XLC) -3.5%.

What Held and What Didn’t

The rotation showed up clearly at the top of my momentum board. Two weeks ago it was wall-to-wall growth - crypto, cloud, software, AI, semis, solar - and all of it rising. Last week half that group dropped off, replaced by healthcare, financials, insurance, real estate and anti-beta. The growth names that hung on near the top, cyber (CIBR), software (IGV), genomics (ARKG) and equal-weight tech (RSPT), were all down for the week. They kept their place on longer-term momentum, not because they rose.

The names going up were defensive, value, and interestingly also cyclicals; regional banks (KRE), banks (KBE), insurance (KIE), homebuilders (XHB) and medical equipment (IHI) all finished green. Low volatility (SPLV) rose 1.7% - while high beta (SPHB) fell 4.5%.

On the other side, the hardest hit were the names that had been leading. Solar (TAN) fell over 13%, clean energy (PBW) 10%, and the ARK funds (ARKK, ARKQ) around 9%. South Korea (EWY) fell nearly 15%. Semiconductors (SMH) was down 4.9% and equal-weight semis (XSD) 6.8%.

PBW Chart

Crypto had some of the worst selling - Bitcoin (IBIT) down around 18%, Ethereum (ETHA) over 21%, the crypto miners (WGMI) nearly 10%.

IBIT Chart

The metals all got hit, no split between the precious and strategic names - gold miners (GDX) off around 12%, silver miners (SIL) 15%, lithium (LIT) and rare earth (REMX) both down 10 to 11%.

GDX Chart

REMX Chart

Bonds Didn’t Catch a Bid

The whole Treasury curve was down on the week, from the short end (SHY) to the long end (TLT), along with investment grade (LQD) and high yield (HYG) credit. A few of these moved into the Improving quadrant, but only because they fell less than equities, not because they rose, and most are still in downtrends.

Where to From Here

I’m in no hurry to buy this pullback. The major indices are only 2 to 6% off their highs - SPY and QQQ fell from Strong Uptrend to Uptrend, so the longer-term uptrends are not broken - but Friday’s action deserves some caution.

A test of the 50-day SMAs is possible and wouldn’t be abnormal - which sit around 3.4% below current prices for the S&P 500 and 5.6% for the Nasdaq 100.

If we continue to correct, I will be watching for relative strength, particularly stocks and ETFs holding their 20-day SMA, and their 50-day if the correction becomes longer and deeper.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

The three buy stop orders triggered on Tuesday, May 26: KLAC, MKSI and HUT. CIEN was a limit order and triggered on Friday, May 29.

The four other resting orders didn’t trigger, and I’ve cancelled those and moved the names back to my watchlist.

Charts below are from the pre-market on Wednesday (June 3, US time). CIEN and HUT are intraday so I can show the recent price action up close.

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KLAC (daily)

On the daily charts, the black line is the 20-day SMA, green is the 50-day, red is the 200-day.

I entered on strength with a buy stop, filled at $1,960.05 on May 26. I’ve raised my stop-loss from $1,780 to $1,860, which sits back below the breakout area, the low on Monday, June 1, and the rising 20-day.

MKSI (daily)

This is a good example of the buy stop gap risk I flagged in the original post. My order was at $325, but it gapped up and filled at $332.82 on May 26. I’ve raised my stop-loss from $289 to $306, under the low on Monday, June 1, and the rising 20-day.

HUT (30 min)

Filled at $113.50 on May 26. It ran to about $140 yesterday, June 2, but reversed, closing below where it opened. I don’t like the look of that daily candle, so I’ve moved my stop-loss up to $117.85 to lock in some profit if it continues lower. Since it pretty much went straight up from the breakout, there’s no obvious daily pivot low to put it under, so I looked at the 30-minute chart and placed the stop under what would be a break to lower lows on that timeframe.

CIEN (15 min)

The limit order at $560 filled at $559.55 on Friday, May 29. It had a big day yesterday, closing at $627. Ciena reports earnings before the open on Thursday (June 4, US time). Normally I want at least a 10% profit cushion before I’ll hold a swing trade through earnings. I’ve raised my stop-loss to $607.50, which is about 8.5%, just under that buffer. If it stays around current levels or pushes higher again tonight, I’ll be happy to hold through earnings. If it drops to around $610 and doesn’t stop me out, I won’t quite have the buffer I’d like, but it isn’t a very large position so I’m willing to accept that risk.

I’ll try to keep sharing these so you can see how the setups actually play out, not just the entries.

Cheers!

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

FNGS Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

FNGS had a very strong week, breaking out to a weekly closing all-time high. But NVDA actually fell 1.95% last week and sits in Lagging. The FANG+ breakout was carried by Micron (+29.29%) and Broadcom (+7.88%), with Microsoft (+7.57%) and Palantir (+14.36%) also up significantly, but both remain below their 200SMAs.

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Market Temperature

The Market Temperature rose to 6.4 from 5.9, moving out of the Goldilocks Zone into Strong.

Three of four pillars improved. The Tape/Trend was the main driver - breadth firmed off the mid-May low and weekly RSI on the S&P pushed to 72.97. One nuance: the breadth scores look strong because the model has a two-week lookback period, showing a recovery off the May 15 low, not a big jump last week. Week-on-week, the percentage of US stocks above their 50-day average only ticked from 57.18 to 58.88.

Monetary/Macro also improved. In last week’s note I said this pillar had the most room to run if bond volatility compressed and the dollar eased. The MOVE index fell from 78.43 to 70.22, and TLT rose (interest rate fell). The dollar (UUP) also fell slightly.

Regime firmed too, with discretionary outperforming staples and high beta continuing to outperform low vol.

The one drag was Sentiment. The VIX fell to 15.32, which the model reads as a contrarian signal.

SPDR Sector Relative Strength

Technology (XLK) is the only GICS sector in the Leading quadrant. It gained 5.89% on the week, is up around 20% over the past month and 31.17% year-to-date. Every other sector is in Lagging, except Energy (XLE) which is in Weakening.

Two weeks ago, the three best-performing GICS sectors on the week were XLU (Utilities), XLV (Healthcare), and XLRE (Real Estate). Last week the defensive sectors underperformed: Consumer staples (XLP) fell 2.23%, utilities (XLU) -2.05%, real estate (XLRE) -1.28%, healthcare (XLV) -0.28%.

Risk Appetite is Rising

This broader risk-on tone also showed up in the factor ETFs. High beta (SPHB) gained 5.68% and closed at a new weekly all-time high. Low volatility (SPLV) fell 2.54%, and BTAL, which is long low-beta and short high-beta, dropped 5.33%, closing at a weekly all-time low.

ARK Innovation (ARKK) jumped 7.26% and crossed back into Leading. The fund is still 49% below its 2021 highs and is not something I would buy, but it’s an interesting gauge of risk sentiment. ARK Genomics (ARKG) was up 12.94% on the week. But it is also still in a massive drawdown, around 70% off its 2021 highs.

XBI is the vehicle I am looking at to play biotech. A break above recent highs around $139 could open the way to a run at the 2021 all-time highs around $174. It is in a Strong Uptrend, sitting less than 2% below its 52-week high and only about 1 x ATR above its 20-day, with RSI at 58.6. It is in the Weakening quadrant, but is sitting right on the border of Leading, with a momentum reading just under 100.

XBI Chart

Software Reclaims its 200-Day

IGV gained 8.14% last week and around 20% over the past month and has closed back above its 200-day moving average for the first time since the January break. It is 13.84% off its all-time highs, with a daily RSI now at 76.1.

The leadership underneath is still mainly in cybersecurity, the crypto miners, and potential AI beneficiaries like AppLovin (APP) and Oracle (ORCL). Most of the large enterprise SAAS names are bouncing but remain “broken” under their 200SMAs.

IGV Chart

Energy - Oil Down, Gas and Clean Energy Up

Crude oil (USO) was down again last week, falling 8.39%, oil services (OIH) -5.79%, energy (XLE) -5.38%, E&P (XOP) -4.63%. All of them are still in Weakening.

Interestingly natural gas went the other way, albeit from very depressed levels. UNG gained 9.05% and was the single biggest momentum riser in our entire universe last week, crossing from Lagging into Improving.

Clean energy remains strong. Solar (TAN) gained 12.10% and Clean Energy (PBW) 5.39%, both holding in Leading.

Bonds and Rates

In last week’s note I flagged TLT’s prior low of 82.77 as a level to watch - a break below it would have been a warning. Instead, bond ETFs across the whole Treasury curve were green (rates down) for the week. TLT was up 1.28%, IEF +0.82% and IEI +0.51%.

The MOVE index, which measures expected volatility in Treasuries, fell from 78.43 to 70.22. If rate volatility had continued to rise, it would have been a possible red flag for equities.

Thoughts for the week ahead

Things look very healthy right now - every major US market index at new highs, risk appetite rising, breadth holding up, and bonds steadying as rate volatility comes down. A cautionary note is the VIX at 15.32, which is low, but not historically extreme. But after nine consecutive up weeks for the SPY, which is still quite extended from its 50SMA, a pullback shouldn’t come as a surprise when it happens.

In My Weekly Focus List piece last week, I outlined 10 stocks I was watching, 8 with specific entries and stops. 4 triggered last week: HUT, CIEN, KLAC and MKSI. I will update that in a new post today or tomorrow, detailing any changes and a few potential new entries. I am not taking large new positions here, though, and am being patient.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Seven out of ten are semis or semi equipment. Due to the high correlation between these stocks, I will not be entering them all in full size positions - even if they all offered “perfect entries”. What I’ll do instead is reduce position size and use a scatter-gun approach (buy them all but in smaller size) if good entries are on offer early in the week. One benefit is that you’ll get stopped out of the positions that don’t work and can look to add to the ones that do - or if you’re lucky, they may all work. However, it’s possible they all fail, so I would not risk more than about 3 or 4% of my entire portfolio when entering this many new positions in a short period. For example, if taking 8 new positions I would risk 0.5% per trade. Another option is to enter two or three names and only add new positions if you get traction on the original ones. Both methods have their own pros and cons - and I do both at different times.

I am writing this at 7pm Melbourne time on Tuesday May 26 - depending on the price action during the week, I may and likely will change at least some of the entry prices and methods (pullback buy or breakout/strength), tighten stop losses, or outright cancel resting orders if the market starts acting badly. If they explode higher without me, I’ll let them go, I do not chase. Flexibility, adaptability and discipline are key to my trading style.

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Semi Equipment

Applied Materials ($AMAT) - Semiconductor equipment. Up 3.6% last week. 3.8% above the 20-day SMA, 4.1% ATR, extension 0.9x ATR from 20-SMA. 3.6% from the all-time high. RSI 62.

AMAT Chart

Note: All daily charts - the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

My strategy for AMAT is to leave a resting limit order at $418 with a stop loss at $392. Those of you in the US or at least in a similar time zone can be more tactical and work your entries better. As with most things in life there are positives and negatives. I usually can’t get the best, most precise entries. However, one benefit of being in the opposite time zone is you can’t panic out of your positions based on daily price action, which makes riding your winners easier.

KLA Corporation ($KLAC) - Semiconductor equipment. Up 4.7% last week. 4.5% above the 20-day SMA, 4.1% ATR, extension 1.1x ATR from 20-SMA. 2.6% from the all-time high. RSI 63.

KLAC Chart

I will enter a buy stop order on KLAC, so I only enter on strength. This also helps reduce risk - if markets pull back and you only have limit orders, they would all trigger and get stopped out if prices continue lower.

I use pretty tight stops most of the time. I usually set a stop between 1-3 ATR for each stock trade - not randomly, but always using a price point on the chart that would invalidate my thesis. For KLAC I will enter a buy stop at $1960 and place my stop at $1780. Could use a tighter stop under Friday’s low around $1861 - because if it breaks out you want it to keep running. If it falls back below Friday’s low, that’s a logical spot to get out, but I’m going to give it a little more room.

One thing to be aware of with buy stop orders: if the market gaps up above your order price, you get filled at the market price on the open, which may be well above the level you set. To manage that risk, I check pre-market prices before going to bed and decide whether to leave the order active or cancel it.

Lam Research ($LRCX) - Semiconductor equipment. Up 4.9% last week. 9.0% above the 20-day SMA, 4.5% ATR, extension 2.0x ATR from 20-SMA. 1.5% from the all-time high. RSI 66.

LRCX Chart

The pre-market is currently showing LRCX (and most of these stocks) will gap up on the open. So I don’t want to be entering too many positions using buy stop orders - if we gap and run that means I’ll miss out, but I’m cool with that. I can’t make tactical entries with tight low-of-day or AVWAP stops unless I stay up until midnight, so it’s a trade-off I need to accept.

Two options I’d consider: a limit order on a slight pullback to about $300, which was resistance during the recent short consolidation, or a lower limit order around $282 which lines up approximately with the 20-day SMA. The first feels a bit aggressive, so I’m going with $282. Stop loss goes under the May 19 low with a little extra breathing room at $252, which would also be under the 50-day SMA. In my opinion there’s no reason to hold a swing trade if the stock is breaking its 50-day SMA - I’m looking for the strongest stocks continuing their uptrend.

MKS Instruments ($MKSI) - Semiconductor equipment. Up 3.4% last week. 7.5% above the 20-day SMA, 4.7% ATR, extension 1.6x ATR from 20-SMA. 1.9% from the all-time high. RSI 66.

MKSI Chart

I’m looking at buying a breakout on MKSI - will place a buy stop order at $325. This has been a very strong stock, so if it goes it could go quickly. I would prefer if it just went sideways for a week or so between the 20-day SMA and the $320 level that’s been holding it back. But you don’t always get what you want. It is currently trading at $334 in the premarket.

The May 19 low is too far away for a stop loss on a breakout setup. An aggressive stop would be Friday’s lows around $311. I’m going to give it more room and put the stop under Wednesday’s (May 20) low, which also sits under the 20-day SMA. Stop loss at $289.

Semiconductors

Monolithic Power Systems ($MPWR) - Power management semiconductors. Up 2.6% last week. 0.8% above the 20-day SMA, 4.4% ATR, extension 0.2x ATR from 20-SMA. 5.1% from the all-time high. RSI 56.

MPWR Chart

I’m just gonna watch this one for now. I may end up missing it - after the shakeout and strong recovery last week, it could get going again here. Pre-market it’s currently trading at $1,625. I considered placing a buy stop order for this as well, with a tight stop loss around $1,550. If I entered this, I’d want it to run quickly. I wouldn’t want to give it too much room as it’s not the cleanest, tight setup. It already pulled back to around $1400 and recovered last week - so if it breaks higher and fails, I wouldn’t want to hold it. Also, I don’t want to enter too many positions on a gap up today, in case they gap and reverse. I’ll just watch this for now and see how it develops during the week. However, if you can take a tactical entry during the live trading session, with a stop under the low of the day, I’d consider that if I was able to do so.

ON Semiconductor ($ON) - Power and sensing semis. Up 2.7% last week. 9.7% above the 20-day SMA, 4.9% ATR, extension 2.0x ATR from 20-SMA. 2.4% from the all-time high. RSI 67.

ON Chart (Daily)

ON Chart (Weekly)

Above are both the daily and weekly charts for ON Semiconductor, so you can see the longer-term base breakout. It peaked in July 2023 on earnings, entered a massive decline of about 70% bottoming in April 2025, and has since staged an impressive recovery. These longer-term base breakouts can often be a little messy. Obviously not always - it might just rip from here. It already retested the breakout zone and bounced strongly last week. I might end up missing it, but that’s okay with me.

Buy limit order at $108.50 with a stop at $101.50.

Credo Technology ($CRDO) - High-speed connectivity for data centres. Up 26.9% last week. 17.9% above the 20-day SMA, 7.5% ATR, extension 2.4x ATR from 20-SMA. 0.2% from the all-time high. RSI 65. Beta of 3.8 - size accordingly.

CRDO Chart

Credo is too wide and loose to enter here, but the strength is undeniable. It closed at all-time highs last Friday but needs to settle down and tighten up to offer a lower risk entry. Definitely on the watch list.

Networking & Infrastructure

Ciena Corporation ($CIEN) - Optical networking equipment. Up 5.3% last week. 6.7% above the 20-day SMA, 5.9% ATR, extension 1.1x ATR from 20-SMA. 2.6% from the 52-week high - but still 44.8% below its all-time high, which dates back to the dot-com era in 2000. RSI 61.

CIEN Chart

This is probably one of my favorite charts. The trend has been so clean, and it has respected the 50-day SMA on pullbacks going back around a year. I’m going to use a limit order here, looking for a bit of a pullback. Limit at $560, stop at $480 - which is below both the May 19 low and the 50-day moving average (currently at $484 but rising quickly). I will also risk 1% of my portfolio on this trade rather than the 0.5% on the others.

Applied Digital ($APLD) - AI/HPC data centre infrastructure. Up 7.8% last week. 14.5% above the 20-day SMA, 8.5% ATR, extension 1.7x ATR from 20-SMA. 5.6% from the 52-week high - but still 59.1% below its all-time high from 2003. RSI 61. Beta of 2.7 - so size accordingly.

APLD Chart

Applied Digital is pretty wild - 8.5% ATR. Limit order at $40.50, which is the convergence of the 20-day SMA and some previous resistance and support. Stop loss under the May 19 low at $34.50, just to give it a little breathing room.

Crypto / Digital Assets

Hut 8 Corp ($HUT) - Bitcoin mining and data centre operations. Up 3.4% last week. 13.5% above the 20-day SMA, 7.7% ATR, extension 1.8x ATR from 20-SMA. 5.7% from the all-time high. RSI 65. Beta of 3.8 - size accordingly.

HUT Chart

I’m taking the opposite strategy with HUT and buying strength. Buy stop order at $113.50 with a tight stop - it should either work or not, and quickly. Friday’s low was $101, so my stop goes at $98.50.

I find writing out a full public plan forces you to think very deeply about each trade - this is as much for me as it is for anyone reading. But I hope you gain some knowledge and insights along the way. I'll try to share updates and make this a regular Sunday night or Monday morning (US time) post.

Wishing everyone a great week ahead!

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Two weeks ago (May 15), only 21 of 121 ETFs were positive. Last week, 98 were positive.

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SPY Chart

QQQ Chart

Market Temperature

The Market Temperature ticked up to 5.9 from 5.7, remaining in the Goldilocks Zone.

Breadth recovered - MMFI (% of US stocks above their 50-day moving average) climbed from 49.74 to 57.18, and MMTH (% above 200-day) improved from 50.44 to 53.60.

The VIX dropped from 18.43 to 16.70.

Why only +0.2 despite a broad rally? Three of four pillars improved, but Sentiment was a drag - the VIX dropped to 16.70, which the model scores as a contrarian signal. The Monetary pillar improved marginally but still has the most room to run if bond volatility compresses and the dollar eases. The MOVE Index barely budged (79.87 to 78.43), the US dollar (UUP) stayed flat at 27.77, and credit spreads improved marginally, but remain at low levels and are not indicating any signs of stress currently. TLT bounced 1.22% last week after falling 2.81% the prior week, closing strongly after probing new lows during the week - I will be watching last week’s low of 82.77. A break below that would be a potential warning sign.

SPDR Sector Relative Strength

XLK (Technology) is the only GICS sector in Leading. Interestingly, the three best-performing GICS sectors on the week were all more defensive - XLU (Utilities, +3.37%), XLV (Healthcare, +3.30%), and XLRE (Real Estate, +3.08%). XLV and XLRE both moved from Lagging to Improving, and XLU is right on the boundary.

Broadening Participation

Across our 121-ETF universe, eight names moved from Lagging to Improving - utilities (RSPU, UTES), real estate (RSPR, XLRE), healthcare (XLV), Germany (EWG), airlines (JETS), and software (XSW).

23 ETFs in our ETF universe are now within 1% of their all-time highs. And it’s not all tech - it includes RSP (S&P 500 Equal Weight), IWD (Russell 1000 Value), DIA (Dow 30), IWM (Russell 2000), and QQQJ (Nasdaq Next 100) alongside the usual AI and semiconductor names. QQQJ - which contains the next tier of non-financial NASDAQ names below QQQ - gained 4.37% vs QQQ’s 1.21%.

Semiconductors, Software, Cyber, and Speculative Tech

XSD (Equal-Weight Semiconductors) gained 9.89% last week finishing the week at a new all-time closing high. RS-Momentum hit 113.62 - the highest reading in our universe. The leadership is mid/small-cap semis: NVTS +37%, ALAB +32%, CRDO +27%, LSCC +19% on the week. SMH (Market Cap weighted Semiconductors) was up 3.59%.

XSD Chart

IGV (Software) is in the Improving quadrant, but a drill-down into its components tells a more nuanced story. Of the 21 Leading names in the software universe, seven are cybersecurity and three are crypto miners. The large enterprise software names - CRM, ADBE, NOW, WDAY, HUBS - are almost all Lagging with YTDs ranging from -30% to -49%. INTU lost 18.59% just last week. The “software rally” is really a cyber and AI infrastructure story wearing a software label.

CIBR (Cybersecurity) continued its run, gaining 6.62% and closing at a weekly all-time high. 17 names are Leading or Improving. The Improving quadrant has 10 names, almost all with double-digit weekly gains (TENB +18.43%, ZS +13.24%, QLYS +13.72%, OKTA +11.44%, S +10.97%).

WGMI (Crypto Miners) was up 8.25% with RS-Momentum accelerating to 108.46. This is increasingly an AI compute story as miners pivot infrastructure toward providing compute for AI - WGMI decoupled entirely from IBIT (Bitcoin, -4.15%) and ETHA (Ethereum, -7.10%) last week.

QTUM (Quantum & AI) rose 7.24%, entering the Leading quadrant. The quantum pure-plays had a massive week - RGTI +48%, QBTS +44%, IONQ +22% are all Leading, while ARQQ +31%, BTQ +29%, and QUBT +17% are all Improving. That said, QTUM is still heavily semiconductor-weighted, and the broader semi rally is doing a lot of the heavy lifting underneath.

Energy - Fossil Fuel Momentum Pauses, Clean Energy Holds

Six energy and oil names dropped from Leading to Weakening in a single week: USO (Crude Oil), XLE (Energy), RSPG (Energy EW), XOP (Oil & Gas E&P), OIH (Oil Services), and DBC (Broad Commodities) - reversing the move from the prior week.

Clean energy is telling a different story. TAN (Solar) and PBW (Clean Energy) both remain in Leading, and LIT (Lithium & Battery) which has an RS-Trend of 117.72 despite Weakening momentum, is bouncing after a roughly 12% pullback between May 12-19.

Tan Chart

PBW Chart

LIT Chart

Thoughts for the upcoming week

Two weeks ago, six energy ETFs were surging into the Leading quadrant while everything else sold off - only 21 of 121 names were positive and breadth deteriorated sharply. Last week that picture reversed completely. The bounce wasn’t just tech snapping back - RSP, IWM, and MDY all outperformed SPY, breadth recovered, and 23 ETF names are at or very near all-time highs, across tech, value, and small caps. That’s a much healthier looking tape in the space of one week. If oil stabilizes around current levels or continues lower, TLT can hold last week’s low, or even better continue higher (rates lower), and the US dollar weakens or goes sideways, the conditions are there for a resumption of the rally off the March 30^th low. Some of the fast movers are already up a lot since Tuesday’s (May 19) low, so I would avoid any new buys if too extended (I am looking for stocks and/or ETFs ideally within 2-3 x ATR% of May 19 low). I will be looking to add exposure this week, generally using the May 19 low as my stop loss.

Stay open-minded and manage risk carefully.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

The S&P 500 (SPY) gained just 0.21% last week. The Nasdaq 100 (QQQ) slipped 0.32%. FANG+ (FNGS) was down 0.32%. The equal-weight S&P 500 (RSP) lost 1.24%, the S&P MidCap 400 (MDY) dropped 2.36%, and the Russell 2000 (IWM) fell 2.31%.

Flat index returns, but that doesn’t tell the real story. Only 21 of 121 ETFs in our universe posted a positive return last week. The other 100 were down.

That divergence got worse on Friday. SPY was up around 1.4% through Thursday before falling 1.20% on Friday alone. QQQ dropped 1.51%, IWM lost 2.41%, and SMH (Semiconductors) gave back 3.80%. The only GICS sector positive on Friday was Energy.

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Market Temperature

The Market Temperature dropped a full point to 5.7, back into the Goldilocks Zone after sitting at 6.7 the prior week.

Breadth deteriorated quite sharply - MMFI (% of US stocks above their 50-day moving average) fell from 63.15 to 49.74. MMTH (% of US stocks above their 200-day moving average) declined from 56.34 to 50.44.

The Monetary pillar weakened as well. The MOVE Index (rate volatility) spiked from 67.25 to 79.87, and the dollar strengthened with UUP rising from 27.34 to 27.77.

The discretionary vs staples ratio (XLY/XLP) also deteriorated, dragging the Regime pillar lower.

What’s holding the reading up? SPY and QQQ both remain in Strong Uptrends and the weekly RSI is still healthy at 69.45. SPHB/SPLV is still signalling Risk-On. But other components in the model - breadth, rates vol, dollar, defensive leadership - all pulled the temperature score down last week.

Energy Sweeps Into Leading

The dominant theme of the week. Five energy and commodity ETFs flipped from Weakening to Leading in a single week: USO (Crude Oil) +10.96%, XLE (Energy) +6.71%, RSPG (Energy Equal-Weight) +5.95%, XOP (Oil & Gas E&P) +5.43%, and OIH (Oil Services) +4.68%. DBC (Broad Commodities) also moved to Leading. UNG (Natural Gas) jumped 7.19% and moved from Lagging to Improving.

SPDR Sector Relative Strength

XLK (Technology) and XLE (Energy) are the only two SPDR sectors in the Leading quadrant. The other nine are all Lagging. XLP (Consumer Staples) is worth watching - its trend state upgraded to Strong Uptrend despite sitting in the Lagging quadrant, and it was one of only four GICS sectors positive on the week alongside XLK, XLE and XLV.

The Other Side

Housing (ITB -7.04%, XHB -6.04%), retail (XRT -6.65%), airlines (JETS -6.99%), and utilities (UTES -4.62%) were among the worst performers. These are all rate-sensitive or inflation-sensitive sectors. Higher oil and rising rates hit them directly.

The mining and metals complex also pulled back hard. URA (Uranium) fell 9.51%, REMX (Rare Earth) dropped 9.22%, GDX (Gold Miners) lost 7.65%, and LIT (Lithium) was down 6.75%. Every mining-related ETF in our universe was negative on the week.

TLT (Long-Term Treasuries) fell 2.81%, and the MOVE Index spike from 67 to 80 signals ongoing rate volatility. In last week’s post I flagged the prior MOVE/VIX divergence resolving - it un-resolved. Rate vol is climbing again while equity vol remains relatively subdued.

What I’m Watching

The Leading quadrant contracted from 25 to 21 names despite SPY being flat. Lagging expanded from 62 to 66.

At 5.7, the temperature is still comfortably in the Goldilocks Zone. But breadth is weakening with large-cap indices holding near highs. It remains to be seen whether this is a short-term rotation and pullback or the early stages of longer consolidation or deeper pullback. We are still quite extended from the 50-day SMAs in SPY, QQQ, SMH and other tech/AI ETFs.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

FANG+ (FNGS) gained 4.94% and moved back into the Leading quadrant after slipping to Improving the prior week. It finished the week at an all-time closing high for the first time since October 2025.

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SPY Chart

For all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.

QQQ Chart

FNGS Chart

Extensions

QQQ and SPY are getting to extreme levels of historical extension from their 50-day SMA. QQQ closed the week 14.55% above its 50-day (up from 10.04% last week). SPY was 7.80% above its 50-day (up from 5.94% last week). In our backtest from May 1999 to April 2026 (6,782 weekly observations for SPY and 6,774 for QQQ), QQQ is almost in the 99th percentile, with only just over 1.0% of observations (70 out of 6,774) at or above current levels. SPY is in the 99th percentile, with slightly less than 1.0% of all observations (67 out of 6,782) at or above this level.

The semiconductor ETFs are even more stretched in percentage terms. SMH (Semiconductors) is 30.37% above its 50-day. XSD (equal-weight semis) is 43.85% above its 50-day.

Market Temperature

The Market Temperature rose slightly to 6.7 last week, up from 6.4 the prior week.

The Tape pillar improved (3.03 → 3.24 out of 4) driven by SPY’s weekly RSI pushing to 69.13 from 65.47.

The Monetary/Macro pillar score dropped (1.48 → 1.26) but the underlying readings were largely unchanged. MOVE actually fell from 70.41 to 67.25, but the model’s direction component scored lower because the 4-week comparison base rolled forward from the April 3 stress peak (84.41) to the April 10 reading (72.15). The rate of improvement slowed, not the conditions themselves. UUP was essentially flat (27.41 → 27.34) but scored slightly lower for the same reason - the more favourable 4-week comparison is fading, as the April 3 stress peak rolled off.

The Sentiment pillar was basically unchanged, with a tiny tick up in the VIX week over week.

The Regime pillar score was up 0.33, due to the IWF/IWD ratio (growth vs value) component flipping from negative to neutral.

Fixed Income Update

In last weekend’s note I flagged equity vol falling while rate vol rising was a divergence worth watching. That resolved last week - MOVE dropped from 70.41 to 67.25 while VIX ticked higher (16.99 → 17.19). Fixed income ETFs bounced slightly - TLT +0.55%, LQD +0.55%, IEF +0.23% - but all remain Lagging with downtrend trend states. LQD was the only one to see its trend state improve (Strong Downtrend → Downtrend). TIP continues to be the outlier, holding a Recovering Uptrend and the only fixed income ETF positive YTD (+1.27%).

SPDR Sector Relative Strength

XLK (Technology) is the only SPDR sector in the Leading quadrant. Nine of the eleven SPDR sectors are now Lagging, up from six last week. XLI (Industrials), XLB (Materials), and XLRE (Real Estate) all dropped into Lagging last week. The only sector not Lagging besides XLK is XLE (Energy), which sits in Weakening after a tough week.

Semiconductors and AI

Semiconductors and AI continue to lead. SMH gained 11.13% for the week and is up 33.88% over the past month. XSD (equal-weight semis) gained 11.18% and is up 54.19% over the past month. Both closed at all-time highs. Thirteen ETFs in our universe currently have RS-Momentum above 105, and all thirteen are tech, semiconductor or AI related names, if you include WGMI (Crypto Miners), EWY (South Korea) and EWT (Taiwan) – which I believe you should given their components.

CIBR (Cybersecurity)

CIBR gained 9.54% last week and its RS-Trend jumped from 92.15 to 97.15. It remains in the Improving quadrant with RS-Momentum at 105.60. The trend state flipped from Recovering Downtrend to Recovering Uptrend and is now 3.85% off its all-time high.

ARKQ

ARKQ (Autonomous Tech) moved from Weakening to Leading last week, gaining 4.72%. RS-Trend at 109.09, RS-Momentum at 100.50. Strong Uptrend and up 15.73% YTD.

I’m considering a new position in ARKQ, with a stop under $127 (could use $129.50 for a tighter or multi-level stop).

Crypto

WGMI (Crypto Miners) gained 20.40% and jumped from Weakening to Leading. RS-Momentum surged to 116.85 - the highest in our entire ETF universe. RS-Trend at 134.31. Strong Uptrend and up 48.24% YTD.

IBIT (Bitcoin) was up 2.20% and remains in Improving. RS-Trend improving steadily (84.79 → 90.32) but still well below 100 and still in a Recovering Downtrend.

ETHA (Ethereum) moved from Lagging to Improving, but only gained 0.34% - underperforming Bitcoin.

IBIT Chart

I don’t usually trade laggards below their 200-day SMAs, but I’m willing to make an exception for Bitcoin. However, personally, I prefer the 24/7 liquidity of the underlying to avoid the gap risk associated with the ETF.

BTC Chart

If BTC continues higher and can consolidate for 2-4 weeks between about $83K-86K and then breakout, that would be an ideal entry. I’ll be watching closely but not planning on buying now with the 200-day SMA (red line) and AVWAP from the all-time high (black line) just overhead. It may just rip through all that potential resistance but that’s OK, and if it does it will offer another better lower risk entry in the future.

Energy

Energy pulled back hard across the board last week. XLE was down 5.35%, XOP -6.51%, OIH -5.37%, USO -6.45%, and RSPG -5.99%. XOP, USO, and RSPG all dropped from Leading to Weakening. RS-Momentum fell sharply across all five names.

OIH and USO charts look the best of the bunch and are sitting right around their 20-day SMAs (OIH -0.87% below, USO -0.01%). XLE, XOP, and RSPG have pulled back below their 50-day SMAs (XLE -3.84% below its 50-day, XOP -3.23%, RSPG -2.93%).

OIH Chart

I’m considering a new trade in OIH, but would enter on strength above Thursday’s (May 7) high, with a stop under the low from the same day.

TAN

TAN (Solar) gained 4.50% and is sitting just 0.27% off its 52-week high. RS-Momentum at 99.44, just below the 100 line. Strong Uptrend and up 23.02% YTD.

Watching TAN for an entry. Ideally would like a pullback toward $59.50 and see some support/signs of strength around the 20-day SMA which should keep rising towards that level over the next week or two.

COPX (Copper Miners)

COPX had a strong week, up 8.75%. The trend state flipped from Neutral to Strong Uptrend and RS-Momentum jumped from 88.17 to 97.46. Still in Weakening but accelerating. Still 14.02% from its 52-week high.

I am also considering taking a position in COPX. Would look to buy strength above Friday’s (May 8) high, with a stop under the low of the 6th, or maybe under $81 to give it a little more breathing room.

With the QQQ and SPY massively extended, driven by tech, semis and AI names, the question becomes how will this resolve itself in the near-term? Will we see a continuation of this explosive performance leading to a massive “blow-off” top, a sharp mean-reversion move in the leaders or just a mild pullback or consolidation while money rotates into some of the laggards. Unfortunately, I don’t have a crystal ball, but in my opinion, given the level of extension in the leaders, it’s prudent to take at least some partial profits on big winners and/or tighten your trailing stops. I won’t be deploying a lot of new capital here, but considering small positions in TAN on a pullback, COPX and OIH on strength, and ARKQ, which just rotated into the Leading quadrant.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

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Disclaimer: The content provided in this newsletter is for informational and educational purposes only and should not be considered as financial, investment, or legal advice. The information shared is based on our research and analysis, but we are not a licensed financial advisor, nor can we guarantee its accuracy, completeness, or timeliness. Market conditions and financial instruments can change rapidly, and any opinions expressed may not be suitable for all investors. Any opinions expressed and/or securities mentioned do not constitute a recommendation to buy, sell, or hold that or any other security. You should conduct your own due diligence and consult with a licensed financial advisor or other professional before making any investment decisions. Past performance is not indicative of future results, and all investments carry the risk of loss. The authors and publishers of this newsletter are not responsible for any financial decisions made based on the content provided herein. By reading and/or subscribing to this newsletter, you acknowledge and agree that you are using the information at your own risk.

Australia doesn’t have that luxury.

The ASX is a much smaller and concentrated market. Banks, resources, and a handful of healthcare and property names make up the bulk of the index. The thematic ETF ecosystem that makes the US framework possible simply doesn’t exist here. You can’t run a two-layer analysis when there’s no first layer to build on.

So, I had to think about it differently.

The ASX 300 Relative Strength Framework takes 301 stocks (VAS holds 304 stocks as at 31 March 2026, but three are suspended from trading) in the Vanguard Australian Shares ETF (VAS), which tracks the S&P/ASX 300 Index and benchmarks each one directly against VAS itself. Instead of ETF groups, I built 33 curated categories - Gold, Critical Minerals, Oil Gas & Coal, Banks, Software, and so on - that group the universe in a way that makes relative strength comparisons meaningful across the ASX 300. Each stock gets an RS-Trend score (how much is it outperforming or underperforming VAS over time?) and an RS-Momentum score (is that outperformance accelerating or decelerating?). Those two dimensions place every stock into one of four quadrants - Leading, Weakening, Lagging, or Improving - exactly like the US framework. Every stock also gets a Trend State rating depending on the current price relative to its Simple Moving Averages (SMAs).

The methodology underneath is the same. The structure around it is different because the market demanded it.

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How weak is the Australian market right now?

Across all 301 stocks in VAS, less than half (48.5%) are above their 20-day moving average. Only a third (33.7%) are above their 200-day. Just 19.7% sit in the Leading quadrant.

At the category level, the leadership is narrow. Only seven of the 33 categories have more than 40% of their stocks in the Leading quadrant - and most of them are resource or energy related. Utilities & Energy Infrastructure leads at 80%, followed by Oil Gas & Coal (67%), Critical Minerals (50%), and Mining & Industrial Services (50%). On the other side, 10 categories have zero stocks in Leading, including Software, Discretionary Retail, Property, and Medtech. The strength in this market is concentrated and thematic.

The first scan

After applying the RS framework, I then run a bottom-up scan for the strongest names.

For the first live run (week ending May 1, 2026), I ran a scan across all 301 stocks looking for names in either the Strong Uptrend or Uptrend state, not overly extended, and trading near their 52-week highs. The parameters are the same ones I use for US stocks - trend states, extension from the 20-day SMA within about three days of normal price movement (measured in ATRs, so it adjusts for each stock’s volatility), and within 10% of the 52-week high.

29 stocks passed the initial scan and there were 10 near misses on the criteria. I then went through all the charts and picked the 15 names that I believe have the cleanest, strongest trends and have the potential to offer low-risk entries over the coming week(s).

Critical Minerals

The standout category. Four of the 15 names come from here, and the broader category has 50% of its stocks in the Leading quadrant.

PLS Chart

(Note: In all daily charts the black line is the 20-day SMA, the green is the 50-day SMA, and the red is the 200-day SMA.)

PLS Group Ltd (PLS) - Lithium producer (spodumene concentrate). Critical Minerals, Leading, Strong Uptrend. Up 6.4% last week (week ending May 1). Currently 8.1% above the 20-day SMA with a daily ATR of 4.4%, giving an extension of 1.8 days of normal range. 0.5% from the 52-week high (-0.5% ATH). RSI 67.

Consolidating at all-time highs, with blue skies above.

SRL Chart

Sunrise Energy Metals Ltd (SRL) - Nickel, cobalt, scandium, and battery materials. Critical Minerals, Weakening, Strong Uptrend. Up 0.8% last week. 6.5% above the 20-day SMA, 7.6% ATR, extension 0.8x. 7.8% from the 52-week high (-32.6% ATH). RSI 60.

Consolidating nicely, first target could be around $16, just shy of the late 2017 all-time highs.

LTR Chart

Liontown Ltd (LTR) - Lithium miner (battery materials). Critical Minerals, Leading, Strong Uptrend. Up 17.9% last week. 24.3% above the 20-day SMA, 5.4% ATR, extension 4.5x - well outside the scan threshold. Right at the 52-week high (-17.4% ATH). RSI 75.

I like the chart, but too extended to buy here for me. Add to pullback watchlist.

MI6 Chart

Minerals 260 Ltd (MI6) - Niobium exploration and critical minerals. Critical Minerals, Weakening, Uptrend. Down 3.4% last week. 3.9% below the 20-day SMA, 6.6% ATR, extension -0.6x. 13.2% from the 52-week high (-14.8% ATH). RSI 50. Near miss on 52-week high gate.

Could wait to see if it breaks out to all-time highs, or if you’re looking for an early entry, could buy strength on a clear reclaim of the 20 SMA.

Diversified Resources

RIO Chart

Rio Tinto Ltd (RIO) - Iron ore, aluminium, copper. Diversified Resources, Weakening, Strong Uptrend. Up 0.2% last week. 0.3% above the 20-day SMA, 2.4% ATR, extension 0.1x. 2.2% from the 52-week high (-2.2% ATH). RSI 57. The Weakening quadrant means momentum is fading relative to VAS, but the trend state is still Strong Uptrend.

Consolidating near all-time highs. Had a shakeout on Thursday, the 30th of April. I’d probably be looking to buy strength above $176. Blue skies above.

MIN Chart

Mineral Resources Ltd (MIN) - Mining services, iron ore, lithium. Diversified Resources, Leading, Strong Uptrend. Up 12.4% last week. 11.2% above the 20-day SMA, 4.5% ATR, extension 2.5x. 1.6% from the 52-week high (-31.2% ATH). RSI 68.

Recent price action is a bit loose. Could wait for it to tighten up, or if you are more aggressive, buy strength above Thursday the 30th of April’s high of $67.80 - Potential targets $75 and $91.

Gold

Both of these names are in the Weakening quadrant with fading RS momentum, and both just miss the 52-week high threshold. However, I thought they were worth including given their outperformance relative to the broader gold category and the gold price.

GGP Chart

Greatland Resources Ltd (GGP) - Gold and copper. Gold, Weakening, Uptrend. Down 2.8% last week. 5.0% below the 20-day SMA, 5.1% ATR, extension -1.0x. 11.9% from the 52-week high (-11.9% ATH). RSI 50. Near miss on 52-week high gate.

I wouldn’t buy this one here, but possibly on strength if it can reclaim the 20-day SMA and prior resistance around $14.50 zone - but I’d be watching the gold price too. I would be hesitant to buy a breakout if the gold price isn’t improving.

PDI Chart

Predictive Discovery Ltd (PDI) - Gold explorer. Gold, Weakening, Uptrend. Down 4.7% last week. 2.9% below the 20-day SMA, 5.8% ATR, extension -0.5x. 11.7% from the 52-week high (-66.2% ATH). RSI 49. Near miss on 52-week high gate.

Another one for the watch list. A potential buy on strength over recent highs around $1.015 - Trading a bit loose at the moment though. Potential targets after a breakout would be $1.50 and $2.00.

Engineering & Contractors

Both of these are mining services plays.

SRG Chart

SRG Global Ltd (SRG) - Engineering, contracting, mining services. Engineering & Contractors, Leading, Strong Uptrend. Up 0.7% last week. 4.9% above the 20-day SMA, 3.5% ATR, extension 1.4x. 5.7% from the 52-week high (-5.7% ATH). RSI 64.

Not the cleanest base, but if it can tighten up a bit in its consolidation here and then break out to all-time highs, could provide a low-risk entry - Watchlist

NWH Chart

NRW Holdings Ltd (NWH) - Engineering, contracting, mining services. Engineering & Contractors, Leading, Strong Uptrend. Up 4.6% last week. 6.6% above the 20-day SMA, 3.3% ATR, extension 2.0x. 2.3% from the 52-week high (-2.3% ATH). RSI 65.

Also not a clean base. But if it tightens up a bit here and breaks out to all-time highs, could provide an entry - Watchlist

Transport & Infrastructure

DBI Chart

Dalrymple Bay Infrastructure Ltd (DBI) - Coal export port terminal. Transport & Infrastructure, Leading, Strong Uptrend. Up 2.2% last week. 5.5% above the 20-day SMA, 2.1% ATR, extension 2.6x. 0.5% from the 52-week high (-0.5% ATH). RSI 70.

I wouldn’t buy this here but on the watchlist for a lower risk entry.

Digital Infrastructure

CDA Chart

Codan Ltd (CDA) - Communications equipment and metal detection technology. Digital Infra & Hardware, Leading, Strong Uptrend. Up 21.6% last week. 21.0% above the 20-day SMA, 4.3% ATR, extension 4.9x. 0.7% from the 52-week high (-0.7% ATH). RSI 77. The RS acceleration is the strongest in the scan.

Extended - pullback watchlist.

ELS Chart

Elsight Ltd (ELS) - Connectivity solutions and drone communication technology. Digital Infra & Hardware, Weakening, Strong Uptrend. Flat last week. 0.3% above the 20-day SMA, 6.2% ATR, extension 0.0x. 7.0% from the 52-week high (-7.0% ATH). RSI 56.

Consolidating nicely - shakeout on Thursday the 30th of April. Could buy on strength on a clear 20-day SMA reclaim for the more aggressive or wait for all-time high breakout.

Food & Agriculture

CBO Chart

Cobram Estate Olives Ltd (CBO) - Olive oil producer. Food & Agriculture, Leading, Strong Uptrend. Up 8.6% last week. 8.5% above the 20-day SMA, 3.7% ATR, extension 2.3x. 4.6% from the 52-week high (-4.6% ATH). RSI 76.

If it forms a handle here under $4, could provide a low-risk entry.

Telco

SLC Chart

Superloop Ltd (SLC) - Fibre broadband and business connectivity. Telco, Leading, Strong Uptrend. Down 0.3% last week. 2.6% above the 20-day SMA, 2.9% ATR, extension 0.9x. 4.8% from the 52-week high (-4.8% ATH). RSI 61.

Consolidating nicely under all-time highs - on breakout watch.

What ties it together

Ten of the fifteen pass all scan criteria. Two (LTR and CDA) are extended after strong recent runs. Three (GGP, PDI, MI6) narrowly missed the proximity to 52-week highs threshold.

The resource and mining services theme dominates, which tells you something about where the ASX’s genuine relative strength lives right now. But the outliers - CBO, SLC, CDA, ELS - are arguably the more interesting stories precisely because their business models are independent of the commodity cycle that drives most of the other names on the list.

Stay open-minded and manage risk tightly.

Cheers,

Marcus Grant, CFTe

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