June Strategy Session: 3 Key Takeaways

Alfonso Depablos, CMT
June 10, 2024

Last week, we held our June Monthly Strategy Session. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month.

During our monthly calls, we focus on long-term charts in an effort to take a step back and put things into the context of their structural trends.

This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and examine the markets from a “big-picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

1. A Green Check for Tech

All year, we have been pounding the table on the strongest stocks and indexes. Naturally, these are the ones that have already exceeded their prior cycle highs.

We refer to some of these leaders as the “Fab 5” which is comprised of technology, semis, homebuilders, industrials, and broker-dealers.

For each of these groups, the primary trend is higher, and the 2021 bull market highs have been left in the dust.

Any corrections we get come within the context of a long-term uptrend. As long as this is the case, short-term tops are likely to fail, and dips are to be bought.

As long as the Tech Sector SPDR is above its 2021 highs, the bias is higher, and we want to continue to lean on the strongest individual tech stocks.

2. Mixed Signals for Risk

Although the primary trends remain firmly in place and point higher for the major averages, some critical assets and risk appetite ratios remain below overhead supply.

The following chart highlights three big question marks for the risk-on theme:

Notice how high beta vs low volatility, high-yield bonds, and small-cap stocks, all stopped going up in late December and have been rangebound for the entirety of 2024.

The bulls want to see these consolidations resolve to the upside, as it would be incredibly constructive and supportive of higher prices for risk asset markets.

These resolutions are likely to occur in an environment where breadth is expanding, and the broader market is making another leg higher. We think this happens sooner, rather than later.

3. Top Tokens Test Resistance

Cryptocurrencies suffered some massive losses during the prior bear market.

We’ve highlighted some of the largest blue-chip cryptos, all of which have been digesting overhead supply at their prior cycle highs this year:

A breakout above these former highs would be incredibly constructive for crypto as an asset class. It would also bode well for the most-speculative areas of the equity market. 

If and when these cryptos make a decisive upside resolution, we’re betting on a new leg higher for the whole space. We want to be positioned accordingly in these tokens and other leaders.

Those are some of the main takeaways from this month’s strategy session.

Thanks for reading, and please let us know if you have any questions!

Allstarcharts Team

Filed Under