I can’t remember a time in my career when I thought about these stocks so much.
One of the first things I do every morning is check the BRL/USD pair and Bovespa.
That tells me all I need to know about how my Brazilian ADRs are trending. I’ve built positions in a number of them just recently.
Some are doing well, others like PBR and VALE, not so much.
But, here’s the thing. Investors are dumping their USD exposure and looking around the globe for new opportunities.
I think this has a lot less to do with trade war narratives and rumors, and a lot more to do with the fact that the US has dominated the investment world for a decade and a half.
America has been the only game in town for anyone looking to generate alpha.
Of course, it couldn’t last forever.
Stocks around the world are dirt cheap compared to the premium multiples found here.
For example, my two favorite Brazilian ADRs are trading at single-digit P/E multiples right now.
First of all, congrats to Goldman Sachs, now the largest component in the Dow Jones Industrial Average.
The last time a bank headlined the Dow was JP Morgan back in 1998.
That’s pretty cool, but that’s all it is. Just a fun fact.
I would say it’s a sign of the times that a tech stock didn’t fill the shoes of UNH, but the Dow is a bit funky in the sense that it is price-weighted instead of cap-weighted.
Speaking of Papa Dow, let’s talk about what’s next for the major averages following the latest beating for US equities.
All the large-cap indexes violated their VWAPs anchored from the April 7 pivot lows this morning. They all tested these levels and held just last week.
That’s been the line in the sand for me as far as a retest of the lows is concerned.
With every day the S&P, Nasdaq, and Dow are below these VWAPs, the higher the likelihood we’re headed back to the lows...
Markets are back in rally mode, and crypto always gives us a good hint as to where things are headed coming into the new week.
Bitcoin, Solana, and friends had a good Saturday session and even repaired some tactical trend damage.
We’ve been discussing various areas of relative strength on our special live streams since last week.
Crypto has been one of them, and the best tokens continue to hold and bounce off key levels.
In fact, I think the potential failed top setups in Ripple and Solana are as good as anything out there right now.
I’m long both for a swing trade and maybe more. We’ll see how things go.
Here is Solana $SOL:
After quickly breaching 120, which has acted as support a good ten times in the past year, SOL just jumped back above this key level and confirmed a bullish...
We’re coming off extreme oversold levels with sentiment in washout territory.
A monster bounce is just around the corner.
So I’ve been digging through all of our scans over the last few days. Some new, some old. Looking for the best long opportunities.
They are all different and cover a variety of universes. International stocks, US growth stocks, sector and industry ETFs, commodity stocks, etc. We have something for everything.
The scans are all similar in a sense that they look to highlight some form of relative strength, momentum, or a combination of the two.
I’m going to keep zigging while everyone else is zagging.
US equities aren’t even close to out of the woods.
The bulls were just out here flexing about two green candles. Are you kidding me?
The truth is, this has been a bush league bounce.
I took some shots, but most of them did not work. So, I’m raising more cash today and loading into some short exposure. This is the most I’ve had all cycle.
Let the non-disciplined buy this dip. There is simply no reason to rush in right now. Until the major averages reclaim their key levels, the bears are firmly in control.
Those bear flags we discussed last week have since resolved higher.
After a little pop on Friday, today marks a critical follow-through day for the broader market.
But we already talked about how an oversold bounce was basically a foregone conclusion. We literally knew it was coming. The fact that we finally got it is not a bullish data point.
The next step now is to measure and judge the quality of this rally. There could be some bullish evidence there.
I already outlined some of the most important levels I’m paying attention to.
It’s all about VWAPs for the major averages. The large-cap indexes have the August VWAPs, and the SMIDs have the Q4 2023 VWAPs. They’re all right there.
Here’s the S&P 500 drawn up to show the confluence of resistance around this level.
I’ve been tough on US equities lately. But it’s really nothing new.
Since last summer, I’ve been writing and talking about taking profits in the US - particularly in US growth - and redeploying that capital overseas.
But the truth is I’m rooting for US stocks. I always am.
So, let’s talk about what I need to see to get excited about them again.
In a few notes last week, I stressed the importance of registering two consecutive up-days at the index level. We’re not going to establish a tradable low without some bullish follow-through.
My attitude has been, “talk to me once we get back-to-back green candles.”
And while I’m really not impressed by the action at all, we did achieve this simple milestone earlier in the week. Congrats to stocks!
The bottom line is this is still a “show-me market.” Let’s discuss what bulls need to see next.