Summary:
Base case: September/October = chop and volatility window, but primary uptrend remains intact toward SPX 6666 by year-end - barring a pull-forward of recession risk from spiking higher unemployment and/or inflation. I'm not expecting either to spike this year, but I am expecting the labor market to continue to weaken into next year with sticky/rising inflation and falling disposable income which hits consumer spending and later corporate margins.
Oversold Rotation: The most compelling sector rotation theme I've been sizing up for months for clients daily, that the market is finally starting to notice: China ADRs (BABA, BIDU, JD, KWEB, FXI). I continue to see relative outperformance in China vs. overbought U.S. megacap tech—a natural paired-trade.
Overbought Rotation: Gold/silver/miners are in a parabola, after a well-timed call July 11th: "GOLD is consolidating before next push higher." Now that precious metals have ran hard, that doesn't mean I would short ATHs; but it is a good reminder what Client Jose warned: a VIX spike would likely kill this silver/metals squeeze.
Rates: 10Y falling below my ~4.10% has bonds bouncing strongly past 4-5 days, but it’s likely a bull trap post-FOMC unless the market is ready to price in a recession NOW (in which case equities wouldn’t celebrate cuts). We aren't there yet.
Vol signals: TAIL ETF is “scooping” on weekly chart (early risk tell); VIX term structure still sleepy—for now.
Stocks/levels: Tactical levels provided for RKLB, ASTS, UFO, HIMS, TAN, RKT, LDI, SMH plus AMZN/AAPL and China ADRs.