Quantitative/Technical Strategist at Raymond James
Member since: Aug '18 · 696 Opinions
There have been a variety of names in the US specifically. Names like AAXN, HWM, and RCL. They'd broken out to new highs, which is very bullish. That was telling him they were the leaders of this new bull cycle. However, over the last couple of weeks they've started to break down. Not just in relative terms, but also in absolute breakdowns.
The leaders breaking down typically suggests that a bigger correction is likely to follow soon.
His team looks globally. They do look at a variety of stocks in Europe and Asia, but their focus is NA and where 90% of their research is targeted. So it's in the NA market where they're seeing a lot of the early signs of market breakdown.
There are stocks that continue to power higher, and the market's very attractive at the start of a new bull trend. But in the intermediate term, things are priced to perfection. Expects some kind of weakness, and he'd be looking to add exposure then.
A short-term pullback typically lasts 1-3 weeks. That's what we've seen over the last couple of weeks. Looks as though markets are starting to grind higher, and that advance phase is typically 2-4 weeks. If he's correct on the bigger call of an intermediate-term correction, it will usually last 1-3 months.
There are 2 ways you can correct. One way is in price, which is how most people think of it. The other way is in time, and a glance at the chart for gold demonstrates this. After gold moved up, it's been consolidating in a sideways trend for the last couple of months.
A lot of names in the space have had monster moves but now correcting. Coming right back to important support around $24.50. Next big support ~$22. Probably get a bit of a dead cat bounce, and then chop around for a bit more if his broader correction call is right.
Today is timely to nibble a bit, but give it some more time over the next month or so. That's when he'd really be adding exposure.
Really big move, a leader to the upside. Now showing signs of stalling and breaking down. Reaffirms his view that we're in a corrective phase. Moved below the 200-day MA, not a great sign. Doesn't mind nibbling here, but expects a better opportunity in the next 1-2 months as we get through September and even into October.
He'd definitely be looking to add around $4250, the support level of the tariff tantrum back in April.
Let's look at the 3-year chart. Definitely turning the corner after a 3-year downtrend. Dividend cut helped. Telcos are boring and defensive, lower beta. So they'll weather the upcoming corrective storm of 1-3 months. Doesn't mind nibbling here, but during weakness he'd be putting $$ to work in the more cyclical areas of the market.
Bigger longer-term uptrend. Lots of insurance names have had really strong moves in line with interest rates moving higher. So the move to lower interest rates affects them all across the board. Likes the stories longer term. Should ultimately come back to $250-260, so look to add there.
His work's telling him that interest rates are in a new secular uptrend, and this would benefit all the insurance names eventually.
(All the past picks today were from October, when he thought we were late cycle. His view is that we've started a new cycle, so tech and consumer discretionary risk-on names should do better.)
Still likes it, but probably more of a market perform for the next year. Then should really come into the spotlight in 2027. Hang on, pick up the dividend, don't add more.