Market review 23.11.19

Bullish follow through

Hello everyone,

Today’s post builds on the prior one. We got the follow-through to confirm that a new trend is likely underway across the Intermarket. It could be an exciting finale to a constantly shifting 2023.

Broad Equities

Let’s begin with a high-level view using the Asset/ETF leadership board.

Mega-cap tech ETFs (XLC, XLK, SMH) are the market segments closest to their 52-week highs (ie. trend leaders). Meanwhile, crypto (BTC, ETH), uranium, and small-tech (ARKW, ARKF) are segments that have gained the most from their 52-week lows (ie. momentum leaders).

You can notice from the above chart that Brazil (EWZ ETF) is a global leader. The next step for this ETF is to make a breakout from this beautiful 3-year base:

I’ll come back to broad equities near the end of this post. Next, I want to discuss the leading equity sector (tech) and present what I believe are the most attractive areas within it.

Technology

Large-cap tech was the leader in H1, and this week, it made significant breakouts. Below is the chart for XNTK (an ETF containing 35 tech stocks dominated by large caps). ETFs like SMH, XLC, IGV, and others look very similar.

Large-cap tech is no doubt healthy, but what has me more interested right now is small-cap tech.

While QQQ was up 2% this week, ARKK was up 10%. This helped the QQQ:ARKK ratio to seal a failed breakdown this week, possibly ending an almost 3-year uptrend (same with interest rates)! I believe it's game-on for small tech to outperform.

Not only on a relative basis but absolute price charts in small tech look much better now than in May. ETFs such as ARKW have formed large bases, while many ETFs such as FFTY have confirmed failed breakdowns.