MktContext.com

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[MktContext.com @mktcontext]

New trade alert!

The next hot sector is starting to break out this week.

You could even say it’s coming back from the dead.

Here’s the latest on the economy and stocks 👇

https://t.co/F7ScGnHO0r

[MktContext.com @mktcontext]

@Valckrie Have you taken profit on most of the shorts already?

[MktContext.com @mktcontext]

We've been warning about this over-extended rally for a while. In our weekly letter titled "Fever Breaking; Blow-Off Top Formed" we wrote:

[MktContext.com @mktcontext]

🤖Semis and Mag 7 are a huge contribution to SPX returns.
If you don't own any of these stocks, you'll be left behind.
Key is knowing where the leadership is.
That's why market timing is important! (see our profile)

[MktContext.com @mktcontext]

🔒Chip stocks and manufacturing PMI move in lockstep.

But while chips are skyrocketing, PMIs are pausing.

Could be a signal of something worse to come.

[MktContext.com @mktcontext]

The yield curve is signaling a manufacturing rebound.

Yield curve spread is a great predictor of the economy.

Steeper = strength. Flattening or inversion = slowdown.

See how the 2021-2023 flattening foreshadowed 3 full years of manufacturing recession.

Are we about to get a flattening again?

[MktContext.com @mktcontext]

@Hedgeye This is a big deal. We wrote about it this week as well. Looks like they're doing everything humanly possible to pump this thing and get it out the door. Huge fees involved. Bankers get rich. Indexes get boosted. Insane times.

[MktContext.com @mktcontext]

@neilksethi Following earnings is the key. It means there's fundamental support for the rally, not just hype/euphoria. We're a big believer in this rally and fully bullish

[MktContext.com @mktcontext]

For 2 weeks we said stocks are over-extended and due for a pullback.

Our shorts worked, but pullbacks have been shallow and dips are bought aggressively.

Now our views have changed…

https://t.co/GtUaxTKf0z

[MktContext.com @mktcontext]

As we predicted in our Sunday newsletter, the Iran deal is here. Now to see if market will hold the gains or if it's sell the news.

[MktContext.com @mktcontext]

🏭Data center additions are still accelerating.

Bottlenecks in components, chips, and energy means it can't get built out excessively.

[MktContext.com @mktcontext]

🎩Sign of market top: Watch bond yields.

Sharp changes in yield = weak stocks

[MktContext.com @mktcontext]

High gross leverage + mid net leverage = hedging or shorting by major hedge funds.

Understanding positioning of large market participants is key for market timing.

[MktContext.com @mktcontext]

Large hedge funds are hedging or turning outright short on this market. Could this squeeze higher or turn around?

[MktContext.com @mktcontext]

Large hedge funds are taking profit on chip stocks.

[MktContext.com @mktcontext]

PPI less CPI. Producer prices are rising but not being passed through to consumer prices. That says a lot about the current state of the consumer.

[MktContext.com @mktcontext]

Inflation rates follow commodity prices (makes sense).

We now have commodities leading the charge. Strong case for inflation to follow.

[MktContext.com @mktcontext]

Oil is still having a big impact on interest rates.

And when interest rates rise, equity bubbles burst.

[MktContext.com @mktcontext]

US Economy is doing pretty well. No evidence of inflation-driven recession.

[MktContext.com @mktcontext]

We’re currently in a bond bear market that started in 2020.

None prior have lasted this long.