This fella learned that it’s not a good idea to hang around and take pictures with a pissed-off bison. Some people might have hung around buying semiconductors for too long, and the group has had a rough July. I posted this yesterday from BofA on my note and on X and it got a lot of attention. It should. All of the data I have- sharing discussions of the extreme crowding, leverage, and options activity in the last two months- has really flipped the script.
These two charts sum up what is happening today. From Goldman Sachs desk: “We are seeing a clear theme of buying Hyperscalers vs selling Semis as our Mag7 basket is outperforming NDX by nearly 3%. Momentum (memory) drawdown continues with our pair basket (GSPRHIMO) down another -6.5% today despite the modest reprieve yesterday, taking MTD performance to -24% (worst month since April 2009)”
This one is the SMH-to-S&P ratio. The outperformance last quarter was extraordinary – to say the least.
The Mag7 vs S&P has been down most of the year with Mag 7 now up 5% YTD. I’m curious if this bounce in Mag7 and drop in semis is just a positioning unwind with the overweighted semis and Mag7 as positioning shorts.
So far, halfway through July, it’s pretty clear to see what’s worked and what hasn’t. Despite decent breadth with 292 up and 216 down the index is only up 0.60%
What has been happening is a churning rotation with the S&P 240-minute chart support and resistance levels still intact. See below.
Quick Market Views
Stocks: Mixed action with sectors; however, it’s all the Mag 7 today, up 2.2%, with S&P breadth neutral, with 268 up and 234 down. No major levels have broken on the indexes.
Bonds: Steepening curve with 2’s down 7bps, 10’s down 4bps and 30’s down 2bps. 2/10 curve is now at +41.70bps
Commodities: Crude is down 0.5%, Natural Gas is up 0.9%. Wheat is ripping up 5%, Corn up 2%, and Soybeans up 0.8%. Copper and Gold are flat with Silver down nearly 2%
Currencies: US Dollar Index is down 0.5% as decent move lower. Bitcoin is up 0.6%
Current Portfolio Ideas:
Changes: I will add to BABA – medium conviction to high again. And add to JD from low conviction to medium. I still have the half of the SPY and QQQ put spreads added on June 16th – took gains recently and are essentially free hedges.
Thoughts: Positive PCT news has the stock up but off the highs. A big customer in Japan for 2027 is great and more customers will follow. The stock is up 5% and in this market, I’ll take it.
US INDEXES
S&P index 240-minute tactical time frame remains below the resistance and above the support levels I’ve watched from early June
S&P 500 Index daily might lose the upside Setup – I grabbed this when price was a little lower and the Setup was canceled. A bounce might keep the Setup. I’ll mention tomorrow if the Setup continues or price flips down.
Nasdaq 100 futures 60-minute tactical time frame has been one choppy mess
Nasdaq 100 Index daily really only has the TDST Setup Trend support as the only level to watch
Current Portfolio
BABA Alibaba announced Apple will put their Quan AI in iPhones. This is a big deal for both BABA and AAPL. We bought this one well at the lows and trimmed the max long yesterday with the Setup 9. With the continuation higher a new Sequential could be starting which is also seen on FXI and KWEB. I remain long all of these and see higher levels. I will add back to BABA to bring to high conviction 5% and add to JD long to medium conviction 3% from low conviction.
FXI and KWEB doing the right things and I am very pleased to have waited for the 13’s at the lows to buy these. I will continue to hold with medium conviction weights
Semis and tech thoughts
Spot a pattern here? It’s only tech and mostly semis.
Nomura’s derivative trader highlights bullish options flows in DRAM ETF. Unfortunately this isn’t the type of action those bullish will want to see as they are all on one side of the boat
DRAM ETF has TDST support to watch
SMH ETF also has important TDST Support
SMH weekly looks toppy with RSI reversing down from extremes
Hedge Fund Telemetry ETF Percentage Price Oscillator Monitor
The PPO monitor (percentage price oscillator) force ranks ETFs by percentage above/below the 50-day moving average. This monitor and others are offered to Hedge Fund Telemetry subscribers on Bloomberg.
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD.
Goldman Sachs Most Shorted baskets vs. S&P Indexes
This monitor has the S&P indexes and the Goldman Sachs most shorted baskets.
DeMark Observations
Within the S&P 500, the DeMark Sequential and Combo Countdown 13s and 12/13s on daily and weekly periods. Green = buy Setups/Countdowns, Red = sell Setups/Countdowns. Price flips are helpful to see reversals up (green) and down (red) for idea generation. The extra letters at the end of the symbols are just a Bloomberg thing. Worth noting: MS with Sequential 13, AAPL with Combo on day 12 of 13, GS and MU with Sequential on day 12 of 13
Major ETFs among a 160+ ETF universe.
If you have any questions or comments, please email us. Data sources: Bloomberg, DeMark Analytics, Goldman Sachs, Street Account, Vital Knowledge, Daily Sentiment Index, and Erlanger Research