Key Notes & Observations (updated)

Updated notes.

Key Notes & Observations (updated):

SOX, NDX and even S&P, the leading indexes of the rally since October 2023, are now in the red for July. They topped and turned in the exact historical window of prior important Tops, as the history books suggested could happen. Throughout July, the market was as overbought as prior important Tops. There is “good overbought” and there is “bad overbought” — and Stocks were undoubtedly in the latter camp. The first 1% decline was a critical sign that Volatility had returned — my primary concern voiced over the last weeks. As before, when I tracked similar streaks on Twitter/X, not many cared (a clear indication of sentiment). Now today may be the first 2% decline in a long time — but the seeds were planted weeks ago. They were revealed in sequence by the market, to those willing to listen.

Similar to other historical Blowoffs, studies revealed that once Stocks turned lower, they had little or no bounce. Today things are getting messy, which increases the chance of an eventual bounce forming, and earlier this morning I published something related to this (and key areas to watch into month-end / August). Getting the sequence right is important, no matter how “messy” it gets (in both directions).

As Stocks stand today, investors had chased the dream of upside Alpha, and woke up to the reality of downside Beta. History was not kind to these shifts, as studied and shared in detail:

“Slowly then all-at-once” (a phrase I've been going back to recently), the Macro pressures which had built up into late June — which were apparent to anyone with an open mind — now matter:

Yields, the Dollar, the Yield Curve, Earnings, the Global Consumer, the Unemployment Trend, these and more factors laid out on July 4 on Twitter/X. Now even AI is being questioned — something unimaginable just a few weeks ago, and another subtle, potentially important sentiment shift.

Those who know me the longest, also know where I think the opportunity lies here. I think we're in the early stages of a major shift in markets, and with it, an enormous opportunity to position a portfolio for a broad Macro and fundamental Trend. Having traded the biggest Macro shifts of the past 25-30 years — some well, others far more tricky... what I can say so far is:

It's a classic market for technical traders, especially those armed with a knowledge of historical patterns, macro cycles, and an open mind. There will be moments to study and review scenarios, and there will be moments to press aggressively — in the direction of the big Trend. As I write here today, I believe these big Trends are well underway, and my goal is to catch important confluences of Time and Price along the way. Stay focused on the goal…

Thanks for reading. Onwards and upwards,

-MC