It’s been a few weeks since I last shared a newsletter.

During this momentary pause, markets haven’t given me much reason to be at my desk. As I’ve contemplated this reality, charts - or the ones I follow at least - have simply moved sideways, popped higher and, more often than not, faded overnight.

Choppy waters, not a place I like to fish.

Under the surface, I’ve found plenty of reasons to kick back and enjoy the fading light of the late summer sun. Breadth has weakened, moving averages have been lost and retracements have been deeper than a welfare officer’s pockets. And then sure, yields, rate hike expectations, CPI yah-dah-yah-dah.

But now, things might be about to change.

With CTAs returning to their desks after a summer of pretending to love their wives at the beach, I’m optimistic that at the very least, we’re about to start trending again.

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The Bull Lives

One of my favorite charts when assessing the underlying health of the bull market is XLY relative to XLP.

So long as this relationship continues trending higher above the support line, I see no reason to exit any of my long term positions, and remain open to upside moves in areas that have offered attractive retracements over the last few weeks.

More on this later.

Looking at SPY and the three PPO measures I use to assess short (bottom panel), medium (second bottom panel) and long term momentum, it’s clear that short-term shenanigans aside, the broader market remains in an uptrend.

Should the PPO flip red on the medium term guage, then sure, I’ll have to reassess this take. But for now, my belief is that my time is better spend identifying opportunities to buy the dip, rather than selling the rip.

In terms of positioning, survey-based NAAIM exposure (take with a pinch of salt, because survey) has cooled since eclipsing the ‘all in’ level a few weeks back.

For bulls, this is good news, with elevated yields, geopolitical jitters and AI-funding concerns clearing the decks a little. Are we low enough to say there’s a wall of worry to climb? Probably not, but with yields hitting 5% in certain areas, I’m not closed to the idea that the shortened Labor Day week will have spooked some of the weaker hands away from the market.

Areas I’m Watching: XLY

XLY looks interesting to me here. Whilst price has chopped in a broad range dating back to May of last year, I’m tempted to add a position here using yesterday’s low as my stop. Not only is price sitting in the golden pocket, there’s also a broader potential H&S pattern setting up, with a break above the neckline potentially fueling the market’s next leg higher.

Adding to this thesis, it’s notable - to me at least - how extreme the underperformance of RSPD has been over a 100-day trailing return vs the benchmark. At 2SD below the typical range, history has shown this to be a savvy buy zone during bull markets, with the prior dip to these levels in mid-2022 preceding a +25% move for XLY.

Utilities

XLU is another sector that has my attention. With price hovering at the AVWAP from the April 2025 low, there’s a clear level to bet against here in my view.

Sure, sector breadth (measured by $BPUTIL in the lower pane) looks iffy, but rather seeing this as a signal to get short, history shows that readings below 30 on this guage have proven to the savvy buy zones.

On a relative basis, RSPU - like RSPD - is sitting in the doldrums, with plenty of potential room to run into should the chart find traction at these levels.

MAGS

MAGS has had a weird year, spending almost every week of 2026 below a declining 30WMA. Not a great look, which may explain the relatively weak YTD performance.

But with price looking to flip the 30WMA from resistance into support, there’s a chance that this might be about to change.

On the daily, MAGS is looking to breakout from a tightening formation, evidenced best by the tightening BBW shown in the bottom pane. I’m a buyer above $70.

Core Holdings

CMPS continues to consolidate above the all-important IPO AVWAP and key pivot. I don’t anticipate an outsized move here until FDA approval is confirmed - hopefully in Q4 of this year, but let’s wait and see.

MOS popping above the 200dma with a long-term PPO flipping green. Might want to retest the breakout level, but I’m happy with how this one is performing thus far.

VIST holding above the YTD low AVWAP and 200dma. PPO is bullish and the chart looks constructive. Wen breakout?

MAGS see earlier comments.

SAIL consolidating at the IPO AVWAP and holding the 50dsma. So long as the latter rings true at the weekly close, I’ll keep holding.

AMZN holding the upwardly mobile 50dsma after a brief dip below to a key retracement zone. Solid RR at 1x ATR below yesterday’s low.

Disclaimer

The information contained in this article is provided for educational and informational purposes only and reflects my personal opinions at the time of writing. Nothing here should be interpreted as financial advice, a recommendation to buy or sell any security, or a guarantee of future performance.

As always, do your own research, consider your own financial circumstances, and never invest money you cannot afford to lose. I may hold positions in securities mentioned throughout this article, and those positions may change without notice.

From where I’m sitting there appears to be two dominant narratives jostling for position in the market.

The first camp is the more obvious one.

With technicals supporting moves up-and-to-the-right, buyers are hoovering up risk assets above key MAs and VWAPs, best demonstrated by the chart below which shows high beta relative to low vol delivering one of the cleanest uptrends you’re likely to see anywhere in the market.

On the other side of the debate reside the commodity bulls and bond bears. For these guys, Iran plays a prominent role - with rising energy costs continuing to validate their thesis.

Don't believe me, go check out diesel and heating oil prices. Oh and then there's silver and copper, both essential in the ai trade, while gold does it's thing as an inflation hedge, or so the narrative goes.

What’s weird - to me at least - is that throughout Q2 and thus far in Q3 both theses have delivered to a certain extent, with the occasional outlier in both camps (crypto and gold, up until recently, software etc.).

So the question I'm asking myself here, somewhat perplexingly given where indices are at, is whether or not both can sustain into year end.

And which, if not both, ends up in the weeds?

Shit, or get off the pot

This week we’ve got two potential market movers that could help determine which side of the tape we want to be on heading into Q3’s twilight zone.

First up we’ve got NVDA reporting after today’s close (Wednesday August 26).

After that, we’ve got Fed Chair Warsh delivering his latest market musings at Jackson Hole both on Friday and over the weekend.

Until the market has had time to digest both, I’m seeing little to no reason to position myself too aggressively - and have instead taken the opportunity presented to me in this here August lull to build some tools, assess some charts and set my stall out for what likely comes down the road.

And while you’ll have to wait for the tools I’m working on to drop (all will be shared for free in due course), you’ll be pleased to know that the charts I’ve been monitoring for clues as to which way the market wants to go heading into the midterms look primed and ready for an outsized move.

Let’s dive in.

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Bonds, yields and peak hawkishness

A few months ago I wrote a piece detailing a thesis coined ‘peak hawkishness’, in which the basic premise argued that some of the rhetoric we were getting out of the likes of Bank of America and Citadel (lol!) was way off the mark.

Two rate hikes, seriously?

Since then, things have changed - and not necessarily for the worse.

What changed? Bessent changed.

And while I’m reluctant to go into too much detail on the Treasury’s decision to bid the long end of the curve - I’m not an economist nor a bond market aficionado - I don’t think you can ignore some of the moves that have played out in the market since last week’s announcement.

Which brings us to…Bitcoin

What we’re seeing here is a potential change in character from the trend that’s been in play since Q4 of last year. Sure, the absence of a higher high remains, as does a higher low, but in my view it’d be foolish to simply ignore the huge volume spike, price action and break above the 200dma that’s played out over recent weeks inspite of this.

Am I buying Bitcoin right now? No sir.

But what I am doing is monitoring the chart for clues moving forward.

Why?

Regardless of what you’ve read on Reddit, Bitcoin isn’t some mythical inflation hedge operating in isolation from the rest of the market - it’s one of the clearest expressions we have of broader risk appetite.

And if it can therefore reclaim the key AVWAP from the 2025 high and establish a new bullish trend, I’d take that as a pretty compelling signal that the risk-on environment is broadening, with risk assets across the board likely to benefit.

And if Bitcoin moves…

Should the above scenario play out, my belief is that - logically speaking at least - other rate-sensitive areas of the market likely follow.

This brings homebuilders, such as LGIH into focus…

It brings Consumer Discretionary (XLY) into focus…

Software (IGV) likely holds its uptrend and flips the long term PPO bullish…

Fintech names such as XYZ potentially rip and resolve from multi-year bases…

All while the broader indices continue their relentless march higher…

But what about dem bonds?

While not my base case, we also have to consider the other side of the argument - one that narrative bros have pinned on yields, but in much simpler terms likely boils down to whether or not the charts detailed above resolve in the direction I’m anticipating.

If they don’t then we likely have a very different situation on our hands - one that delivers the much-cited seasonal weakness that tends to occur around this time during midterm election cycles, but also the unfortunate reality that comes with charts such as this…

What this shows is the relationship between new 52-week highs and new 52-week lows among Nasdaq stocks. The logic is based on Norman Fosback’s High-Low Logic concept: in a healthy market, you generally shouldn’t have large numbers of stocks making both new highs and new lows at the same time.

And yet here we are…with the current reading eclipsing those which preceded the Dotcom peak, the GFC and Covid. Yikes!

Were this to undo what has been a spectacular bull market dating back to 2022, then it won’t happen in a vacuum - with an extraordinary event such as those listed in the lower panel the most plausible cause (cough, Iran, cough).

At which point we’ll likely hear about how ‘there have been ‘omens’…right’?

Source: Bluekurtic Market Insights

In this scenario, all the scary stuff you’ve likely been reading about oil, diesel, bonds and more comes into view - in which instance, shorting the tits out of TLT becomes the trade everyone makes…despite the fact it’s sitting at historical support and has spent the best part of four years trading in a range.

And then of course there will the shorting opportunities on SPY, QQQ and of course those tasty high-beta BTC proxy puts *looks deeply into Michael Saylor’s eyes*. Yummy.

If I sound facetious…

While it’s important to acknowledge the left-tail risk that comes with this latter scenario, I want to make it clear that my base case remains firmly in the bull camp.

And no, that’s not just a gut feeling…

Looking at my risk composite model, sure - there are signs of moderate weakness present in the market.

Medium-term breadth metrics (stocks above the 50dma) have deteriorated slightly, whilst staples relative to discretionary remains above its non-trending 50dma.

But are either of these enough to get my bear juices flowing? Come on, man.

Until we see volatility expand, spreads widen and, above all else, price begin to fall - I’m comfortable entering some starter positions across some of the market’s more rate-sensitive names.

Should these break below upwardly mobile moving averages or prior support zones, then sure - I’ll take the L and reassess. That’s trading.

But if I’m right? Well then we’ve got a different situation on our hands entirely - one that sees high beta continuing its relentless march to the right, crypto maintaining its monster move from the lows and SPY continuing its surge towards $8k. Woof woof.

And in this scenario, you bet I’ll be putting some capital to work.

Best,

Alex

Disclaimer

The information contained in this article is provided for educational and informational purposes only and reflects my personal opinions at the time of writing. Nothing here should be interpreted as financial advice, a recommendation to buy or sell any security, or a guarantee of future performance.

As always, do your own research, consider your own financial circumstances, and never invest money you cannot afford to lose. I may hold positions in securities mentioned throughout this article, and those positions may change without notice.

In it, I spent a fair chunk of it highlighting charts that explained my cautious tilt on the market - and, FWIW, I still think many of those charts remain valid - only for the market to completely ignore me and soar higher while I sat on the sidelines.

This, naturally, prompted a bit of a reassessment: what was I missing?

More importantly, what could I have been looking at that might have allowed me to participate rather than watch from the sidelines?

That’s what led me to the collection of charts and tools detailed in this post.

It happens; it’s all part of the game. I’m nowhere near the complete package, but that’s kind of the point - the aim is to keep learning, refine the process and, hopefully, get a little better at putting my chips to work whilst those around me lose theirs.

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Dancin’ While The Music Plays

Every trader has their north star charts. One of my personal favourites is XLY/XLP, which tracks the relative performance of discretionary stocks against staples.

What does it show? Pretty simple. Discretionary stocks have been trending higher relative to staples since markets bottomed in late 2022.

And that makes sense in the context of this bull market: when investors are confident, they tend to favour the more economically sensitive, higher-beta names in consumer discretionary.

For me, XLY/XLP is less about predicting the S&P 500 and more about answering a simple question: are investors leaning into risk, or hiding from it? Right now, the answer remains firmly in the former camp.

High Beta, Steppin’ Up

Another north star and another one from last week’s post: high beta vs low vol.

When the former outperforms the latter, the bulls are in control. And just look how orderly this grind higher has been - with price consistently flipping prior resistance into support above a 200dma.

So long as the trend holds and we continue seeing higher highs and higher lows, I see no reason to panic here.

Breadth Leading Price

Despite the market’s bifurcated nature (more on that later) breadth remains healthy across the board. Both the percentage of S&P 500 stocks trading above the 50dma and 200dma remain above the historical average, trending higher above rising 50dmas.

Typically, breadth leads price. So if these levels start to falter, then tightening up stops or even exited positions isn’t the worst looking play. But given where we are right now, I’m more than happy to let my positions ride.

Three PPOs, One Clear Message

Here’s one I picked up from David Keller.

A great way to gauge the underlying health of the market is to look at PPO (Percentage Price Oscillator) across multiple timeframes.

PPO is essentially a momentum gauge, showing whether a faster moving average sits above or below a slower one. Here I’m using three speeds - 21/34 for long-term momentum, 5/13 for intermediate momentum and 1/5 for short-term momentum - to see whether the bullish trend is broad-based across timeframes.

Right now, all three are above zero, which is a pretty compelling signal.

Despite the occasional short-term wobble, momentum has repeatedly reset and reasserted itself, while the longer-term PPO has remained firmly positive since early 2023.

With the S&P 500 sitting near all-time highs, the message is pretty simple: the trend remains bullish, and there’s little evidence here yet of a meaningful change in regime.

Rotation, Rotation, Rotation

In my early days as an investor I was consistently guilty of looking in the rear-view mirror - focusing on the best-performing sectors at the highs and largely ignoring the rotation playing out beneath the surface.

In other words, I was skating to where the puck had been rather than where it was going. Worse still, I spent way too much time trying to predict market tops and bottoms - buying into whatever theory was in vogue that week (banking crisis, Yen Carry Trade…sound familiar?).

These days, using the collection of tools I’ve outlined in this post, I like to think I’m a little more disciplined about looking beneath the headline performance and identifying where the next trade might be.

Hopefully these charts will help you do the same.

Best,

Alex

Psilocybin is an interesting compound.

Best known as the hallucinogen found in magic mushrooms - an illegal drug across most of the developed world - most people associate it with the summer of love, music festivals and other hippy-adjacent activities.

What’s less known about psilocybin however, is that over the last twenty years or so, pioneering scientific research has shown that the compound has much more to offer society than a brief, hallucinogenic pause from reality.

While some studies have demonstrated psilocybin’s ability to produce rapid, significant and, in some cases, sustained reductions in symptoms of major depressive disorder when administered alongside psychological support (see Johns Hopkins 2020/21) - others have sought to prove psilocybin’s worth in combatting treatment-resistant depression, which is where Compass Pathways (CMPS) comes in.

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The Basics

First things first, CMPS isn’t in the business of selling magic mushrooms.

The company is developing a pharmaceutical-grade version of synthetic psilocybin, known as COMP360, which is administered in tightly controlled clinical settings alongside trained therapists.

Every dose is measured, every patient is monitored and every trial is designed to answer one question: can this become an FDA-approved treatment for people suffering from treatment-resistant depression?

Note, this is an important distinction. Treatment-resistant depression isn’t someone having a bad week. These are patients who have often spent years cycling through antidepressants, changing dosages and trying different therapies, only to find that nothing sticks. For many, they’ve simply run out of options.

That’s the gap CMPS is trying to fill.

How Have Trials Progressed?

During its latest earnings report, management confirmed that COMP360 - the company’s cornerstone, synethic psilocybin based drug - met the primary endpoints in two separate Phase 3 trials, demonstrating not only a rapid improvement in depressive symptoms but benefits that lasted for at least six months.

If approved, that gives COMP360 a clinical profile unlike anything currently available for treatment-resistant depression and helps explain why many analysts believe it has genuine blockbuster potential.

Speaking of ‘approval’, the company has now begun the rolling submission of its New Drug Application (NDA) to the FDA, with the full submission expected to be completed in Q4 this year. Assuming everything remains on track, management continues to target a commercial launch during the first half of 2027.

Backing all of this is a cash balance of $433 million, enough to fund operations well beyond launch and into 2028, while the company simultaneously advances a late-stage PTSD programme.

The Elephant in the Room

Right now CMPS doesn’t generate any meaningful revenue and is largely funded by stock offerings and grants.

Unlike the likes of NVIDIA or Microsoft, this isn’t a business with billions of dollars flowing through the door every quarter. It’s a clinical-stage biotech, which means investors are effectively backing the company’s science, management team and ability to navigate the regulatory process. If FDA approval were delayed or, in the worst-case scenario, denied, the stock would almost certainly come under significant pressure.

That’s simply the nature of biotech investing. The potential rewards can be enormous, but so too are the risks. One day you’re up 50%, then next you’re nursing a loss. That’s just the way it goes.

The flip side, however, is equally compelling.

Should COMP360 receive FDA approval and launch commercially next year, CMPS would transition almost overnight from a company burning cash on research and development to one generating revenue from what could become the first widely available psilocybin-based treatment for treatment-resistant depression.

It’s the latter scenario that I’m betting on with a portfolio allocated of just over 5%.

Technical Analysis

Looking at the chart CMPS is in an interesting spot - having reclaimed its anchored VWAP from its 2020 IPO during the weekly session. For risk-averse investors, this offers a super tight stop below current levels.

What’s more, volume has been supporting the uptrend that’s been in play dating back to mid-2025, with prior resistance now flipping to potential support.

Supporting the trend is the broader psychedelic space, as evidenced by the PSIL chart below, which looks remarkably similar to CMPS - not entirely surprising given its 10% weighting in the ETF.

Further Reading

Where once psychedelics were seen as nothing more than a recreation drug offering users a momentary break from reality (and, more significantly, their egos), today we’re seeing everything from magic mushrooms, LSD and Ketamine re-emerging as therapeutic drugs used to combat depression, anxiety and other, complex mental health conditions - which makes them a compelling, and arguably ethical investment vehicle for those willing to roll the dice.

But don’t just take my word for it, please be sure to do your own research.

If you’re interested in exploring psychedelic space, I’d thoroughly recommend Professor David Nutt’s ‘Psychedelics’ as the best place to start. Other great options include ‘How to Change Your Mind’ by Michael Pollan and ‘Stealing Fire’ by Steven Kotler and Jamie Wheal.

Happy reading.

Best,

Alex

Disclaimer

The information contained in this article is provided for educational and informational purposes only and reflects my personal opinions at the time of writing. Nothing here should be interpreted as financial advice, a recommendation to buy or sell any security, or a guarantee of future performance.

Biotechnology investing is inherently speculative. Companies such as Compass Pathways remain pre-revenue and are subject to significant clinical, regulatory and commercial risks. While the potential upside may be substantial if COMP360 receives FDA approval and achieves commercial success, there is an equally real possibility of delays, setbacks or capital loss.

As always, do your own research, consider your own financial circumstances, and never invest money you cannot afford to lose. I may hold positions in securities mentioned throughout this article, and those positions may change without notice.

As the market continues to frustrate bulls and bears in equal measure in what has proven to be a tricky tape since new highs were made back in June, I have found myself somewhat gun shy of late.

Whereas in Q2 short term swings felt almost too easy, Mr. Market has wasted no time in teaching me a valuable lesson over the last month or so - one of patience, at least until we see a definitive break in either direction across neatly coiled indices.

On the surface, things appear calm - demonstrated by my Risk Composite Model (below) that shows only one trigger firing at the time of writing:

Elsewhere, a number of key risk on/risk off measures continue to hold exactly where bulls needed them to - with the best two examples arriving in the form of SPHB/SPLV and XLY/XLP.

And that’s without mentioning SPY, QQQ and IWM - all of which remain above an upwardly mobile 200dma, despite recent consolidations.

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So Why Aren’t I Buying?

If you were to look at these charts in isolation, you might be wondering why I haven’t piled in to the same high beta longs that have contributed so handsomely to the bull market that’s been in play since late 2022.

Believe me, it’s something I’ve been thinking about a ton myself.

But markets don’t function in a vacuum. Instead, they are the sum of countless moving parts- leadership, breadth, sector rotation, macroeconomic forces, interest rates and investor positioning- all pushing and pulling against one another.

And right now, while pockets of the market continue to look constructive, plenty of other signals are flashing amber.

First of, there’s the shift between growth and value that’s been playing out throughout 2026. Note the breakdown from the potential head and shoulders top, with price currently sitting at the lowest level since late 2024.

Then there’s the performance of the market’s MVPs MAGS relative to SPY. Note the breakdown below the 30wma which occurred in Q1 of this year and how that same level has flipped from prior support to new resistance. Note also the downward slope of this key moving average for the first time since the ETF’s inception.

And then there’s XLC which, like MAGS/SPY, has slipped into corrective territory below a declining 30WMA for the first time since the beginning of the 2021 bear.

Bullish Clues…

So far, so confusing. But fear not…

When it comes to assessing the underlying health of the market and where the next opportunity potentially lies, there are a number of tickers I refer back to when periods of chop/uncertainty arise.

Top of that list is NVDA.

Right now, we're seeing this bellwether hold above a key pivot, comfortably above the AVWAP anchored to the 2025 tariff-tantrum lows. If it can continue to defend the $190 level, I believe that would be one of the clearest signals yet that the AI trade is alive and well - potentially marking the start of a rotation back towards growth over value.

And For the Bears…

On the flip side, XLE is what I’m monitoring as a potential headwind, with the potential to drag indices, growth stocks and broader risk-on measures lower.

What I’m seeing here is a market that’s beginning to price in a world of higher-for-longer interest rates. Energy has broken decisively above a multi-year base, while the 10-year Treasury yield is once again pressing against the top of a two-year consolidation.

That combination shouldn’t be ignored.

Rising yields increase the discount rate applied to future earnings, disproportionately weighing on the long-duration growth stocks that have led this bull market.

At the same time, persistent strength in energy suggests investors aren’t yet convinced inflation has been fully tamed. If oil continues to climb, it only adds fuel to that narrative.

My Two Cents

Although much of the market remains firmly in the bullish camp - arguably rightly so given the charts I shared at the top of this post - I’m finding myself becoming increasingly cautious at current levels.

If we’re looking to XLE and its relationship with yields for clues, I think it’d be irresponsible to ignore what’s unfolding geopolitically.

The point is fairly straightforward: so long as the Strait of Hormuz remains disrupted, I struggle to build a convincing bearish case for energy.

Any prolonged interruption to one of the world’s most important oil shipping routes has the potential to keep commodity prices elevated, feeding through into higher energy prices and, ultimately, stronger earnings prospects for the likes of XOM, CVX and the broader energy complex.

That doesn’t automatically mean the wider bull market is over. But it does mean there’s a macro backdrop developing that is far less supportive of the high-duration growth stocks that have led this rally. Until that changes, I’d rather err on the side of caution than assume the path of least resistance remains higher.

Of course, the beauty of technical analysis is that it doesn’t demand conviction, but flexibility. If the evidence changes, so will my positioning.

A sustained reclaim of the 30-week moving average in MAGS/SPY would be a meaningful step towards restoring confidence in mega-cap leadership. Likewise, if growth versus value can regain its own long-term trend, I’d have little issue rotating back into the names that have served investors so well over the past three years.

But until those signals appear, I’m reluctant to fight what the market is currently telling me.

Best,

Alex

Disclaimer: The views expressed above are my own and are intended solely for educational and informational purposes. Nothing in this newsletter should be construed as financial advice, a recommendation to buy or sell any security, or a solicitation to take any particular investment action. I may hold positions in securities mentioned and may change those positions without notice. Markets are inherently uncertain, and all investing involves risk, including the potential loss of capital. Always carry out your own research and, where appropriate, seek independent financial advice before making any investment decisions.

When the portfolio speaks, you’d be a fool not to listen.

And right now, mine is telling me one thing: outside of energy, longs simply aren't working. Tech longs? Brutal.

I won’t bore you with the specifics of what has been playing out throughout July, you know the deal by now - Koreans are getting liquidated, semis are flushing lower and those software stocks that I’ve been monitoring for months now, just can’t seem to break above the 200dma.

Adding to the drama, this week we’ve got the FOMC to contend with, complete with the on-and-off again relationship that’s playing out between the Whitehouse and Iran. Oh, and if that wasn’t enough, how does a slew of MAG7 earnings tickle your wick?

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Of course, a few weeks of poor price action doesn’t automatically mean the bull market is over. But it does mean it’s time to stop forcing trades and start paying closer attention to what the market is actually saying.

With that in mind, here are a handful of charts I’m watching most closely over the coming days. None are particularly complicated, but together they paint a useful picture of where money is flowing, where it’s leaving, and whether this latest bout of weakness is simply another shakeout- or something a little more meaningful.

Let’s start with the one that’s grabbed my attention more than any other: XLC.

What’s concerning here is that the price action that’s playing out on XLC looks eerily similar to that which played out in November 2021 - two months before the broader market peaked and rolled into a bear market.

Speaking of, the broader market itself isn’t looking all that shiny here either.

With my Risk Composite model flashing a score of 3/5, we’re back in the amber ‘warning zone’ - with heightened volatility, weakness in discretionary stocks relative to staples and, most alarmingly, widening credit spreads, contributing to the current malaise.

And yet despite these warning shots being fired, the simple fact is that so many charts outside of tech refuse to quit - just look at the equal weight S&P…

Look at banks…

Look at industrials…

Look at healthcare…

All of these charts are definitively bullish. That’s not an opinion, it’s straight up fact - higher highs, higher lows, all trending up and to the right above key moving averages.

So what’s going on?

At times like this, the traders who dismissed narratives on the way up are often the first to reach for one on the way down.

It’s just deleveraging. It’s just tech. It’s just Iran.

Maybe they’re right. Maybe they’re not.

But the market doesn’t care about the story you’re telling yourself. It cares about price. And right now, price is telling us that tech is starting to look heavy - like, real heavy.

Could this change post-FOMC? Could we see IGV finally reclaim the 200dma and inspire tech bulls to rotate out of names like TSM, NVDA and ALAB back into laggards such as PLTR, MSFT and NOW?

Maybe.

Or maybe this is simply the market reminding us that leadership rotates, not all corrections end the same way, and the only thing more expensive than buying weakness is blindly buying every weakness.

Either way, I’m not particularly interested in guessing.

Instead, I’m happy sitting on my hands and waiting for the tape to show me the way. Boring, but ain’t that just the game?

Best,

Alex

But before we get to that, consider this quantitative study from Bluekurtic.

What it shows is remarkably simple. In 16 of the previous 17 years in which the S&P 500 made a new high during June, the index went on to make another new high in July.

As things stand, preserving that impressive record simply requires the S&P 500 to rally a little over 1.8% during the nine trading days remaining this month.

So rather than asking whether we’ll make another new high, I’m more interested in what might get us there.

The MVPs are Stepping Up

For those of you that caught my latest newsletter, it won't come as any surprise to see the likes of MTUM and DRAM taking a breather this month. In fact, throughout July, both Q2 leaders have corrected by 12.5% and 29% respectively. So far, so predictable.

But while much of the market remains fixated on mourning the loss of its biggest winners, others have been keeping a weather eye on the stocks most likely - at least from a purely mathematical perspective - to drag the S&P 500 over the line and into fresh all-time highs.

I am, of course, referring to MAGS - the ETF tracking the Magnificent Seven. Because for all the talk of broadening participation, when it comes to dragging the index higher, these seven still do an awful lot of the heavy lifting.

Right now we’re seeing MAGS trending higher above key moving averages, having offered savvy buyers a solid entry point between the 61.8 and 78.6 retracement.

Not All MAGS Are Equal

Of course, recognizing that the Magnificent Seven are likely to do the heavy lifting isn't the same as concluding they're all buys. Far from it.

AAPL, for example, has already enjoyed an exceptional run and is beginning to look stretched from a risk/reward perspective. MSFT, meanwhile, remains below its 200-day moving average - a hurdle I’d rather see reclaimed before committing fresh capital.

That leaves a much shorter list.

AMZN, TSLA and NVDA all strike me as names quietly coiling beneath the surface. None have yet made the sort of euphoric move seen elsewhere, but all are displaying the kind of constructive price action that could see them assume leadership should the S&P 500 make one final push to fresh highs this month.

In other words, if the Magnificent Seven are going to provide the fuel, I’d rather own the names with room to run than those that have already emptied the tank.

NVDA

Of these names, NVDA has me the most interested. Trading above an upwardly mobile 200dema, check. Higher low above a key retracement level. Check. Moving averages coiling for a big move. Check, check and check.

AMZN

AMZN, similar story - trading above key MAs having offered a nice entry when price reclaimed the 200dema back late June.

TSLA

TSLA is worth a look here too. Spicy, for sure. But that potential higher low in the golden pocket makes this one worth considering - with the obvious trigger being a sharp and swift move back above the coiled moving average ensemble.

So What’s The Trade?

Given the combined 40% weighting of AMZN and TSLA within XLY, my attention is increasingly turning towards September $120 calls.

The extra time gives the trade room to develop, while the risk management is straightforward: as long as price holds above the 200-day moving average, I'm happy to stay involved. A decisive break below it, and I'm out.

I’m also eyeing a swing position into NVDA earnings in late August.

For this trade I’ll likely go further out of the money to keep the premium manageable, while bringing the expiration in slightly compared to the XLY calls.

The hope is that a strong pre-earnings run quickly pushes the options into the money, allowing the move in the underlying stock to do the heavy lifting rather than simply relying on more time.

Have a great week.

Alex

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Disclaimer: None of the information contained in this newsletter constitutes financial or investment advice, nor should it be interpreted as a recommendation to buy, sell or hold any security or financial instrument. Everything shared here reflects my own research, opinions and trading process at the time of writing, and is intended for educational and informational purposes only. Markets are inherently risky, and past performance is no guarantee of future results. If you choose to act on anything discussed, you do so entirely at your own risk. Always carry out your own research, consider your personal financial circumstances, and, where appropriate, seek advice from a qualified financial adviser. Options trading carries significant risk and can result in the loss of your entire premium.

I’ve been thinking a lot lately.

Not just about the markets, but about what actually constitutes a worthwhile addition to your weekly diet of technical, macro and market analysis.

If you’re anything like me, you probably spend a good chunk of your week scrolling through setups, relative strength charts and the latest hot takes from your favourite finfluencers.

But the longer I trade, the more I realise how little of it is genuinely useful.

Take this morning, for example.

I sat through a 40-minute video on market internals. The analysis itself was solid, but by the time it finished, I couldn’t help feeling a little short-changed. Not because the information lacked value, but because after 40 minutes of talking, the host offered a grand total of zero actionable ideas.

No tradable setups. No framework for putting the data into context. Not even a view on how it might shape the opportunities heading into a new trading month.

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Is that really how we're generating alpha these days? By staring at the windsock, declaring the breeze to be easterly, then calling it a day?

Or should we be putting our balls on the line and offering a hypothesis about what that might actually mean over the coming days and weeks?

Or should we be putting our balls on the line and offering a hypothesis about what today’s evidence might mean for the days and weeks ahead?

With that in mind, this week’s newsletter takes a slightly different approach.

Rather than throwing another deluge of charts and trade setups your way, I’m going to do something far more useful: put my neck on the line.

Below are the themes I expect to define the next few weeks, the evidence supporting them, and the areas of the market I think are most likely to benefit if I’m right.

Swimmers off. Balls out. Let’s dive in.

A Different Kind of Bull?

You’ve probably read all the explanations as to why MU and AMD ran so hot throughout Q2. AI demand, earnings upgrades, and secular growth trumping macro headwinds, not to mention bottlenecks, bottlenecks and more bottlenecks.

It’s been a generational run for momentum (MTUM) since the April lows, but with a new quarter comes new opportunities.

In my view, MTUM is threatening to put in a top here, with a death cross on the 10/20dema looking likely barring a big reversal next week. Add to this the bearish divergence that’s been building between price, RSI and the MACD, and the setup looks ready to punish late longs.

Lastly, there’s this ‘lil nugget by Warren Pies.

Sure, this all might sound a little scary, especially if you’re trading MU with 10x leverage. But for those of you who, like me, currently find yourself sniffing around for opportunities outside of the names that crushed Q2, there are plenty of reasons to remain optimistic.

Hawkishness, What Hawkishness?

As discussed last week, the market has continued to shrug off rate hike fears - a thesis which now appears to be slowly making its way into the mainstream.

Whereas last week Kalshi was assigning an 81% probability of rate hikes before 2028 and a 65% chance of a hike arriving as early as July next year, those numbers have since cooled to 73% and 58% respectively - a drop likely attributable to this week’s weaker than expected NFP print.

Are we out of the woods completely? No. But that’s not a bad thing as far as I’m concerned. Give me more talk of rate hikes to fade and that wall of worry to climb!

Should this easing of hawkish rhetoric continue throughout Q3 - I see little evidence of the time of writing as to why it shouldn’t - then I’m looking at crypto-proxies, high beta, homebuilders and retail as potential benefactors.

One chart that ticks two of these boxes? Coinbase.

At the time of writing COIN is holding above its Q2 lows, a major support zone ~$140 and the AVWAP from the company’s IPO. Should price hold these levels and trend higher, I’ll be looking for a favorable entry for a short-mid term swing.

XLY has my attention too.

Having traded in a broad range and lagging the broader index on a relative basis throughout Q2, I can see why so many traders aren’t interested in discretionary stocks right now.

But if this breaks out, driven by the potential tailwind that potentially comes with a more dovish-leaning FOMC, then TSLA and AMZN probably deserve your attention.

From Failed Moves…

One of my favourite setups is when the market narrative and price action drift apart. Failed breakouts and breakdowns are the obvious examples, but they're really just symptoms of a broader theme: when the crowd says one thing and the tape says another. Double bubble!

XLC is top of my watchlist for a failed breakdown. If this thing holds and the MACD continues to support the pop above the Q2 lows, then META, GOOG and NFLX come into play as potential longs.

As far as failed breakouts are concerned…

As I rightly predicted a few weeks ago, financials were among the standout performers in the latter half of Q2.

But with everyone and their dog now pitching XLF and KRE as the hottest tickets outside Marbella, I’m becoming a little more cautious. Cautious - not bearish.

If the sector spends the next few weeks or months digesting those gains, I’ll happily revisit it. Until then, I think there are better opportunities for my cash elsewhere.

What About the Index?

Given the weightings of the MAG7 (roughly 35% of SPY and over 40% of QQQ), if you’re looking to trade the indices, ‘monitoring the situation’ on MAGS isn’t the worst idea.

When stocks that account for such a large share of both SPY and QQQ take a breather, it’s difficult for the indices to make meaningful progress - even if plenty of stocks beneath the surface are quietly getting on with the job. That’s just pure, unadulterated math at work, folks.

But despite all the talk of MAGS lagging the broader market of late, until we see a decisive break below the 200-day moving average cloud and the AVWAP from the April 2025 lows, there’s not much to fear here in my view.

In fact, if much of what I’ve outlined in this report plays out, there’s a reasonable chance the MAG7 end up as one of the main benefactors in Q3.

What do we need to see in the short term to turn this hypothesis into reality?

A golden cross with the 10dema (orange line) crossing above the 20dema (purple line) wouldn’t be the worst place to start. Add to that a rising MACD histogram, and you’ve got a couple of reasons to lean bullish SPY and QQQ.

TLDR

If there’s one takeaway from this week’s newsletter, it’s this: don’t confuse rotation with deterioration.

The headlines will continue to change. Narratives will continue to swing. The market will keep trying to convince you that the move you’ve just missed is the only one worth chasing.

I suspect the better opportunities over the coming weeks will come from asking a different question: where is capital likely to flow next?

That’s the hypothesis. Time will tell whether it’s right, but I’d rather put a view on the table and be judged by it than spend 40 minutes describing the direction of the wind.

Have a great weekend.

Best,

Alex

Disclaimer: The information contained in this newsletter is provided for educational and informational purposes only and reflects my personal opinions at the time of writing. Nothing here should be construed as financial advice, investment advice, or a recommendation to buy or sell any security. I may hold positions in securities mentioned. Always conduct your own research, consider your own financial circumstances, and consult a qualified financial adviser if appropriate. Investing and trading involve risk, and past performance is not indicative of future results.

When Kevin Warsh stepped away from the mic after his FOMC presser debut, the sound of traders desperately typing out their ‘quick takes’ filled the Twittersphere.

While some interpreted the presser as hawkish, others celebrated the new chair’s ambiguous stance relating to forward guidance - something echoed by none other than the US Treasury Secretary, Scott Bessent.

Similarly, the market has been sending mixed signals as it digests the presser.

Mega cap tech is siding with the hawks. Bonds, biotech, homebuilders and small caps...not so much.

MAGS Signal Weakness

On the surface, it’s easy to understand why the market has become increasingly hawkish.

Since Warsh’s debut, MAGS has slipped below its 200-day EMA for the first time since April, while all seven constituents traded beneath their respective 50-day moving averages during the weekly session.

Relative performance looks even worse.

MAGS/SPY has registered fresh 52-week lows in four of the six sessions since the FOMC meeting, prompting traders to jokingly rename the ‘Mag 7’ the ‘Lag 7’.

Who said originality was dead?

Sure, taking the relative performance of MAGS and indeed the S&P500 - and to a lesser extent, the Nasdaq - in isolation, it’s easy to see why so many traders have attached themselves to the popular narrative that rate hikes, rather than rate cuts, are becoming ever-more likely in H2 2026 through H2 2027.

Prediction markets have embraced the same view. At the time of writing, Kalshi assigns an 81% probability of rate hikes before 2028, with a 65% chance the first arrives as early as July next year.

Sure, if you only looked at mega-cap tech, you’d probably reach the same conclusion.

The problem?

The rest of the market isn’t telling the same story

The Market Disagrees

Earlier this week I shared some thoughts on what I felt was a confusing tape.

On the one hand, mega cap weakness and a strengthening dollar. On the other, the incredible strength displayed by biotech stocks (XBI) and small caps (IWM).

Since then, I've spent some time digging into the data. The more I look, the less convinced I am by the market's prevailing hawkish narrative.

Here's a quick recap of what's happened since the FOMC press conference (in no particular order):

• After closing at 4.95% on the day of the press conference, the 20-year Treasury yield has fallen to 4.87% (an 8 bp decline), while TLT is threatening a breakout above its 200-day EMA.

• XBI has closed at fresh all-time highs every session since June 17, showing persistent leadership from one of the market’s most duration-sensitive groups.

• IWM has held both its 10- and 20-day EMAs, registering three new intraday highs over the past five sessions.

• XHB has broken to multi-month highs and remains firmly above its 10-, 20-, 50- and 200-day EMAs.

• XLI has printed another all-time high and continues to trade well above a bullish moving average ensemble.

Here’s a question I can’t shake:

If Warsh had genuinely delivered a hawkish surprise, why are some of the market’s most rate-sensitive areas continuing to lead?

Traps Are Being Set

Right now, the tape appears to be setting traps in both directions.

Mega-cap weakness and a stronger dollar are tempting investors into a more hawkish interpretation, while beneath the surface, money continues to rotate into some of the market's most rate-sensitive areas, keeping the ‘peak hawkishness’ thesis in play.

These two messages rarely coexist for long. At some point, one camp is going to be left red-faced as the tape tears apart their carefully constructed, comfortable narrative.

Who wins?

In my view, bonds decide.

If the prevailing narrative proves correct and further rate hikes begin to enter the conversation, it’s difficult to argue against equities facing increasing headwinds.

The last time TLT experienced a sustained drawdown- 2022 being the obvious example- SPY entered a bear market, ultimately falling roughly 27% from peak to trough across a 12 month period.

But what if that doesn’t happen? What if the ‘long DXY, short TLT’ trade is over crowded? What if Warsh, isn’t as hawkish as everyone believes him to be?

A Quick Word on Warsh

One inflation metric I'll be paying particularly close attention to over the coming months is Trimmed Mean PCE- the measure Kevin Warsh has repeatedly highlighted as his preferred gauge of underlying inflation.

Like headline CPI and core PCE, it's still moving in the wrong direction, reinforcing the market's increasingly hawkish interpretation of recent data.

That said, it's worth remembering that inflation is inherently backward-looking.

With tensions between the US and Iran easing and the risk of a sustained energy supply shock appearing to fade, it's not unreasonable to expect some of the recent inflationary pressure to unwind in the months ahead.

Therefore, should this metric begin to cool, it could provide a more compelling signal than CPI alone that underlying inflation isn’t the existential threat many argue it to be today, potentially reopening the door to a more accommodative Fed and, in turn, a more supportive backdrop for risk assets.

So What’s The Trade?

Assessing the weight of the evidence is part and parcel of being a trader. Right now, that means keeping a close eye on names and sectors that should be most sensitive to a changing rate environment, namely IWM, XBI, XHB and TLT.

Sure, we may continue to see the market shake out below its shorter-term moving averages. SPY and QQQ may even lose their 50-day EMAs. But in isolation, I’m not convinced that tells us much beyond the market taking a well-earned breather after a strong run.

If, however, the selling begins to broaden out and those rate-sensitive areas start rolling over alongside the major indices, then the weight of the evidence shifts - and with it, the outlook.

For now though, the tape remains choppy rather than broken. No need to panic. No need to rush in.

With that in mind, I’m happy to stay patient, let the data come to me, and adjust my positioning as the evidence evolves.

Have a great weekend.

Best,

Al

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If April and May were easy, June has been anything but.

Despite very little actually breaking outside of inflationary prints - in fact, June has delivered the clearest signs yet of easing tensions between the US and Iran - I find myself increasingly muddled by what the tape is telling us.

The market hasn’t given a decisive signal one way or the other. Instead, it’s been a month of mixed messages, contradictory narratives and volatile price action in both directions. Hardly conducive to the kind of clean swings I like to make when trading.

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Risk Composite

My Risk Composite Model supports this view.

Earlier this month, strengthening staples relative to discretionary stocks and a spike in the VIX were enough to push the model into 'caution' territory.

This week, we're seeing another yellow flag, with volatility re-emerging and TLT/SPY reclaiming its 50-day moving average.

None of this screams panic. But it does suggest that left-tail risk is beginning to creep back into the conversation, reinforcing the idea that, while the tape isn't broken, it isn't as clean and straightforward as it was throughout April and May.

Strat Universe & Moving Average Ensemble

The standout feature of this dashboard is the unusual leadership profile.

Despite DXY pushing to fresh multi-month highs and six of the Magnificent 7 trading below their 50-day moving averages, XBI and IWM occupy the top two spots in the rankings.

That’s not the leadership mix you’d typically expect in a risk-off environment.

Meanwhile, SPY and QQQ have lost some short-term momentum, but remain above their medium-term trend measures.

Taken together, this suggests we're not looking at a market that's outright risk-off. Rather, we're witnessing a rotation of capital from former leaders into prior laggards.

The biggest beneficiaries of that shift are highlighted below - a useful starting point when weighing up opportunities heading into Q3.

Relative Performance Analysis

Looking at sectors relative to the broader market can be a useful way to identify where capital is rotating beneath the surface.

While XLK remains the obvious leader, it's often the less-loved sectors quietly outperforming the index that provide the earliest clues about where the next opportunities may emerge - as well as the overall health of the tape.

XLF/SPY

Let’s start with financials. They lead us higher on the way up, and lower on the way down. Which makes today’s level all the more interesting.

If this latest ‘oops’ reversal can hold and the ratio continues to trend higher, I’d view that as one of the clearest signals that the broader market remains in a healthy, risk-on environment. Party on, playboy.

If we breakdown? Well then that’s a different conversation entirely. One that likely takes place over a bowel of microwave ramen, rather than steak tartare.

XLV/SPY

Healthcare has been getting a lot of attention lately, having reclaimed key mid-long term moving averages during the last month as a sector in isolation. And just check where the sector is sitting relative to the broader index.

If healthcare can continue to climb here, I’m looking at LLY to hold its 20dema, NVO to challenge its overhead 200dema and UNH to hold its bullish moving average ensemble.

Can it head lower? You bet. But until we see the tickers mentioned above breaking below their respective moving average ensembles, I see little reason to fade them.

XLE/SPY

Higher oil prices and rising energy costs have been a recurring theme throughout the first half of 2026. Whether that trend continues is anyone’s guess. But if XLE/SPY can continue to hold above its now-rising 200-day EMA, the weight of the evidence would suggest the energy supply shock may not be behind us just yet.

If energy prices make a strong start to H2 2026, the inflationary implications and the FOMC’s stance around rate hikes could act as a headwind for risk assets across the board - so it’s well worth keeping an eye on this one in my opinion.

XLP/SPY

Thankfully, XLP/SPY has our backs when it comes to spotting regime shifts. Below the 200dema, risk assets remain bid and bull markets thrive. Above that level, and things tend to get a little nastier.

Right now, price remains locked in a downtrend below the 200dema. No doy, it’s a bull market until proven otherwise.

A Quick Word on Tech

While semiconductors continue to do the heavy lifting, I’m increasingly of the view that QQQ’s rally off the April lows will struggle to sustain itself unless the rest of the cavalry starts to show up.

Software, communications, and several former mega-cap leaders remain well below their relative highs, leaving the advance looking increasingly narrow.

Long story short, if QQQ is going to push meaningfully higher into Q3, some of the laggards need to pull their weight, and soon.

XLC

If it looks like a top, walks like a top and talks like a top…then it’s probably a top.

Home to the likes of META, NFLX and GOOGL, XLC looks rough right now. If indeed this is a top, keep in mind that the top three communications holdings account for roughly 10% of QQQ. So don’t sleep on its significance as a sector.

Could we stage an ‘oops’ reversal here? Man, that’d be awesome.

But until XLC reclaims some key moving averages - and META and GOOGL do the same - I’m steering well clear of this one.

IGV

As long as IGV continues to retest prior resistance without breaking down, there’s hope for the bulls. Ideally I want to see a close above the AVWAPs shown on the chart before allocating more risk into this area - not before.

Home to MSFT, CRM, NOW, ADBE and PANW, IGV isn't some niche corner of the market. Depending on how you define the group, core software names account for roughly 15–17% of QQQ - so you wanna pay attention here.

Closing Thoughts

If there’s one takeaway from June’s data, it’s that certainty remains in short supply.

The trend is still up. The risk models aren’t flashing red. Yet the leadership profile, sector rotations and mixed signals beneath the surface make this one of the more difficult tapes we’ve seen since the April lows.

Maybe the answer is as simple as waiting and seeing.

But for now, I’ll keep following the data, respecting the tape, and waiting for the next high-conviction opportunity to emerge.

Until then, remember: nobody knows nothing.

Thanks for stopping by.

Best,

Al

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Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser, and nothing published here constitutes a recommendation to buy, sell or hold any security. All views expressed are my own and reflect my interpretation of market conditions at the time of writing. Markets can and do change rapidly. Trading and investing involve risk, including the potential loss of capital. Always conduct your own research, consider your financial circumstances, and consult a qualified financial professional before making any investment decisions. Past performance is not indicative of future results.

If I were to try and define the weekly session in a word, it’d be…humpphhhh.

On the one hand, my risk composite model remained in the ‘all clear’ zone (more on that later) after briefly signaling a ‘caution’ signal last week - with risk assets across the board gapping higher on Monday’s session.

Those gaps, which seemed so promising at the start of the week, are now filled on SPY, QQQ and IWM - all whilst Bitcoin, which enjoyed a brief rally back up the 20dema during Monday’s session, is once struggling to hold any momentum and is down ~7% from the weekly high.

On a personal level, Monday’s gap had me fooled.

Excited at the prospect of new highs, swings that were opened on SPOT, TEAM and NOW all proved to be losers. Software, which I had hoped (and still do, to a point) to find buyers at the AVWAP from the prior lows, stuttered - with a number of key holdings currently pinned below key moving averages.

I could attempt to insert a narrative here to explain why the week played out the way it did, Warsh, OPEX etc. But where’s the value in that?

Instead, I’m simply going to hold my hands up, take the L and reassess where we’re at, and more importantly, where I think we might be headed as Q2 comes to a close in a few weeks time.

The lesson? Don’t chase up-gaps during FOMC and OPEX week.

Onwards and upwards.

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Risk Composite Model

During yesterday’s session, I made a quick change to my risk composite model.

Instead of using XLY/XLP as one of the key risk metrics used to determine the overall health of the market, I subbed-in RSPD/RSPS instead - essentially ditching the former for an equally-weighted version of the same metric. Something I’m hoping will help to reduce false signals, which tend to occur when XLY’s largest weightings - AMZN and TSLA - make oversized moves.

Right now, we’re still showing a score of ‘0’ - signaling that under the market’s hood, few signs of stress exist - at least those measured on the composite model.

Rotation Thesis - Playing Out

Despite IGV and XLC continuing to lag, it’s good to see that the rotation thesis outlined a few weeks ago has played out, with XLF XBI and XLI the obvious winners - much to the delight of my JPM calls.

Tech bulls, myself included, will be pleased to see XLK holding nicely above an inclining 20, 50 and 200dema, though I remain frustrated by the bifurcated nature of the space, with SMH clearly dominating over former leaders, such as META and MSFT. Just take a look at SMH/IGV:

Will this momentum divergence between semis and software ever resolve?

Who knows.

All that matters right now is that until we start to see signs of cooling in semis and some rotation into other tech-specific sub-sectors, the choice remains simple: chase momentum in names like MU, INTC and TSM, or prepare for opportunities elsewhere?

Communications, Can You Read Me?

Whilst I may have been early on my XLC thesis, I’m still reluctant to accept that I’m wrong. Same goes for IGV. The bad news is that the market doesn’t care what I think. The good news, however, is that both sectors are offering solid entries at current levels, with tight stops on offer at/near this week’s low.

XLC

META

SPOT

NFLX

Healthcare Has a Pulse

Another area I’m looking at right now is healthcare. Right now, XLV is retesting the 50dema from above for the first time this month - and if it holds, I think there are some mid-term swing opportunities in this space.

XLV

LLY

NVO

HIMS

One last thing…

Whilst crypto continues to trade like a dog, there is one chart that’s caught my attention during this latest sell-off. Check COIN relative to ETH below - whilst the latter made a new low this month, the former is yet to do so, a divergence that in prior instances has signaled a bottom for both the crypto token, and COIN.

Does this signal the end of the crypto bear market is coming to a close? Not even close. But it’s definitely interesting - and one I’ll be monitoring over the next few weeks for further clues.

Have a great long weekend and enjoy some football.

Best,

Al

Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser. All opinions are my own and reflect my personal interpretation of market conditions at the time of publication. Trading and investing involve risk, and you should always conduct your own research, consider your financial circumstances, and consult a qualified professional before making any investment decisions.

Let’s keep it simple.

After nine consecutive weeks of gains through April and May, the market decided June would be a month of consolidation. A little giving back. A little profit-taking. A healthy reminder that stocks don't move in a straight line forever.

Over the last fortnight, the 50dema was tested. And held.

The AVWAP from the Megagap of April 8 was tested. And held.

Gaps were filled. Narratives were challenged. Conviction was tested.

And for late buyers, pain was felt.

Yet despite all of that, last week’s close offers reason for optimism. Looking at SPY, price closed above both the 20-day EMA and the all-time high AVWAP.

What’s more, my Risk Composite Model re-entered the green zone, with the VIX falling back below the 50dema during Friday’s session.

Long story short, if SPY can continue to climb above 740 next week, my plan is simple: re-engage. Buy calls. Press the gas. And lean back into the same aggressive mindset that served so well throughout April and May.

Until price tells me otherwise, I see no reason to assume this is anything more sinister than a normal consolidation after an exceptional run.

SPY/QQQ

A hammer candle after buyers stepped in a the 50dema (red line) and Megagap™️ AVWAP (turquoise) - setting up a tasty looking reversal on the weekly. So long as buyers defend SPY 740 and QQQ 687, I’m in dip buying mode.

IGV

After playing the initial pop before watching late chasers get smoked over the last few weeks, there’s probably enough blood on the streets for me to get interested again as far as software is concerned - at least in the short term. Great RR with stops below the Q1 AWVAP (turquoise).

NOW above 101 is my pick of the bunch in this space. ORCL above 190 is a close second. TEAM above 88 not bad in third.

RGTI

RR is there on RGTI above the 50dema (red line) and prior low AVWAP (turquoise). Inverted head and shoulders pattern on the daily showing a neckline retest. Risky one - this one moves fast. But what’s life without a little spice?

ADEA

Not the cleanest breakout but a breakout nonetheless. Happy holding this position above the 50DEMA and adding calls above the prior low AVWAP (turquoise). Another risky one.

SOCL

Not the most liquid of ETFs, but SOCL held up well during the last couple of weeks, which means I’m interested - especially above the AVWAP from the Q1 lows. Key holdings include META, RDDT and SPOT. Watch the latter for a potential IHS breakout from a well defined bottoming formation.

NVDA

If we’re going higher, semis won’t be sitting on the sidelines. NVDA needs to reclaim the 50dema (red line) and AVWAP from the Q1 lows in the short term. Confidence grows above 207. A break below last week’s low spells trouble IMO. One to watch.

Long and Short of It

After two weeks of consolidation, multiple tests of support, and no shortage of bearish narratives, the bulls are still standing.

Could that change next week? Of course.

But until it does, I’m happy giving the benefit of the doubt to the trend that has been in place since April.

My risk models have done a great job of telling me when to push and when to tighten up over the last few months - and as long as we stay in the green zone, I’m not going to fade it.

As always, price gets the final say.

Let’s have a great week.

Best,

Al

Disclaimer: The content provided by Al Trades Charts is for educational and informational purposes only and should not be considered financial advice. I am not a financial adviser. All opinions are my own and reflect my personal interpretation of market conditions at the time of publication. Trading and investing involve risk, and you should always conduct your own research, consider your financial circumstances, and consult a qualified professional before making any investment decisions.

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Narratives are cosy, familiar and something that human beings typically cling to as a means to justify every event that’s transpired since the dawn of time.

Ze Germans lost the war because Hitler invaded Russia.

The Titanic sank because the Captain fell asleep.

Stocks are falling because…

Granted, those are deliberately simplistic examples, but you get the point.

Humans are wired to search for cause and effect. We crave neat explanations, clean conclusions and villains we can point to when things go wrong. Narratives serve a purpose, but only up to a point.

Beyond that, they often become a lazy shortcut - a convenient substitute for the uncomfortable reality that most outcomes are driven by a messy combination of factors, probabilities and unintended consequences.

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Markets are perhaps the best example of this.

At one extreme, every down day is framed as the beginning of some mythical bubble bursting. At the other, we’re handed a more respectable-sounding explanation - the Strait of Hormuz, bond yields, tariffs, inflation, take your pick.

And yet stocks spent the best part of two months grinding higher while many of these same narratives were being peddled as reasons to stay bearish.

Then, the moment price moves in the opposite direction, they’re dusted off and repackaged as the obvious explanation.

Which is precisely why it's dangerous to anchor your investment process to headlines. More often than not, they're explaining what already happened, not what's about to happen.

Because what’s about to happen, might actually be something much less dramatic.

Here’s a chart I shared on X yesterday. On it, you’ll see I’ve annotated some key levels on interest - most importantly, in my view at the least, the turquoise line which represents the AVWAP from the ‘Megagap™️’ move of Wednesday April 8.

Here’s how the same chart looks today…

The gap has been filled and the AVWAP and 50dema are being tested.

And yet despite this irrefutable fact, provided by nothing other than price action on a chart, we’re already seeing the usual narratives being peddled to explain what may well turn out to be healthy retest of support after a monster rally.

The Strait of Hormuz.

Trump has lost control of the war.

The bubble is bursting.

We’re all going to die.

Bears, naturally, are among those shouting the loudest. And who could blame them? After spending nine straight weeks on the sidelines, shaking their fists at the sky while the S&P 500 marched higher, it’s easy to understand why they’re so angry.

But price doesn’t care. Not what the bears think, nor what I think. And it certainly doesn’t care about the latest narrative du' jour.

So what am I doing?

Pretty much the same thing I’ve been doing since the rally began: respecting price.

That doesn’t mean blindly buying every dip or pretending risk doesn’t exist. Quite the opposite. If this pullback develops into something more meaningful, I want to be ready for it.

For me, that means tightening things up beneath the 20-day EMA, respecting key anchored VWAPs and generally trading a little lighter than I was a few weeks ago when breadth, momentum and trend were all firing on all cylinders.

The gap has now been filled. The AVWAP from the April lows is being tested. The 50-day EMA is right there too. These are exactly the types of levels you’d expect price to interact with after a near-vertical move higher.

If support fails, I’ll adjust accordingly. If it holds, then this may simply prove to be another pause within a broader uptrend.

The important point is that the chart will tell us. Not X. Not CNBC. Not the guy who’s spent the last two months predicting a crash that never arrived.

Until then, I see little value in forcing a narrative onto what currently looks like a fairly ordinary test of support.

In the meantime, maybe go touch some grass.

Best,

Alex

This week, the S&P 500 notched its longest winning streak since April-May of last year.

All while the Strait of Hormuz remained closed, oil traded north of $90 a barrel and bond yields across the globe hovered near multi-year highs.

A truly fascinating (and occasionally hilarious) environment to trade.

While the macro crowd has spent the last few weeks either sitting on their hands or embarrassing themselves on X, technical traders have been doing what they do best: buying strength, respecting the trend and riding moving averages higher as stocks continue to climb the wall of worry.

Personally, it’s been one of my strongest quarters to date.

After successfully playing the April bounce and correctly calling the great renaiSAASance in May, my focus for June remains refreshingly simple: stick to the process, stay aligned with the tape and continue making money.

For those of you that signed-up for the paid tier, the live trading room enjoyed another fruitful month. Based on just one contract per trade, total profits for the month totaled $1,260, giving us a running total for Q2 of $6,020.

If this reads a little like a victory lap, so be it.

Markets like the one we’re trading right now don’t come around every day. And when opportunity presents itself and you’ve got the conviction and discipline to act on it, I think it’s important to acknowledge that.

That said, the market doesn’t care what happened yesterday. The only question that matters now is whether the conditions that got us here remain intact.

Is Breadth Deteriorating?

One development that caught my attention this week was the deterioration in market breadth.

Over the last five trading sessions, the S&P 500 has recorded negative breadth every single day. In other words, the index continues to grind higher, but fewer stocks are helping to do the heavy lifting.

Since the start of 2024, we’ve seen only three other instances where negative breadth persisted for five or more consecutive sessions. Each eventually stretched to at least six days, including an unusually long 14-day streak in late 2024.

How did the S&P 500 perform after these instances - shout out to Frank Cappelleri for the chart.

There’s also a noticeable divergence in play between the S&P 500 notching ATHs whilst the percentage of stocks trading above the 20, 50 and 200dma remains pinned below the highs set in April.

For now, I think the sensible approach is to treat these breadth metrics as a yellow flag rather than a red one.

Breadth measures like these are incredibly useful for understanding what’s happening beneath the surface, but they rarely pay to be viewed in isolation. As long as the major indices remain above key moving averages and leadership groups continue to hold their uptrends, the weight of the evidence still favours the bulls.

Could these divergences eventually matter? Absolutely.

But history suggests that markets can remain narrow for longer than many expect. Until price starts confirming the weakness, I’m inclined to give stocks the benefit of the doubt and allow time for participation to catch up with the advance.

Which brings us to the more important question: where does the opportunity lie from here?

Where I’m fishing for the next trade

With software now catching a meaningful bid and a number of names in the long-term portfolio continuing to cook, I’m reluctant to spend too much time retreading old ground.

Instead, I’d much rather focus my attention on areas of the market that looked primed for a new impulsive leg higher - and right now, that focus is squarely on financials and communications.

Whilst my JPM calls were likely premature, I’m happy holding them so long as XLF holds this bullish flag pattern (specifically above the AVWAP front he prior lows). Confidence grows above the 200DEMA shown in blue, with a breakout ahead of next month’s earnings season providing a great opportunity in some of the space’s more unloved names (hence, JPM calls).

As far as XLC goes, it’s an eerily similar setup - with one clear caveat. Weightings.

Specifically, META - which currently boasts the largest weighting in XLC at 23%. If META catches a bid above the AVWAP from the prior low at 615, I’d be reluctant to bet against XLC breaking higher from the flag shown below.

If XLC does start to move, one ticker to keep an eye on is NFLX - which currently finds itself at an interesting level having given back a lot of the gains made earlier this year.

Don’t forget the leaders

While I love fishing in underappreciated waters, it’s important to recognise the areas of the market that continue to work away in the background. Yes, this includes SMH - but also pockets of the market exposed to base and industrial metals, as well as other inflation-sensitive sectors such as fertilisers.

A few tickers worth looking at this space

FCX

CLF

MOS

HBM

And lastly, a place where NOBODY is looking

Maybe I’m still feeling a little too pleased with myself after the software call, but I can’t help looking for other corners of the market that may have fallen victim to similarly flawed narratives.

Which brings me to sports betting.

More specifically, I quite like the look of FLUT and DKNG at current levels. Here’s the latter’s chart:

The prevailing view seems to be that prediction markets are about to eat their lunch. Maybe. But that strikes me as one of those stories that sounds far more compelling on social media than it does in the real world.

Yes, prediction markets have grown at a remarkable pace, and yes, they’ve undoubtedly stolen some mindshare from traditional sportsbooks. But investors seem to have jumped straight from “interesting new competitor” to “existential threat” in record time.

Meanwhile, DraftKings just delivered 17% year-over-year revenue growth, generated record quarterly EBITDA, and noted that prediction markets have had only a negligible impact on sportsbook revenue thus far.

Consumer activity on its own predictions platform is growing rapidly, and management appears more interested in joining the trend than fighting it.

Flutter’s situation looks similar.

Despite all the handwringing, FanDuel remains the dominant player in U.S. sports betting, and management continues to describe the impact from prediction markets as minimal. In fact, they’re investing heavily in their own prediction market offerings rather than retreating from the space.

The market appears to be pricing these businesses as though prediction markets are about to replace sportsbooks altogether. The reality may be far less dramatic. Most bettors aren’t looking to become traders. They want parlays, same-game multis, boosts, loyalty rewards, slick apps and a familiar betting experience. Prediction markets may grow the pie rather than simply steal it.

Could Kalshi and others take share? Of course. But there’s a world of difference between “competition is increasing” and “the investment case is broken.”

As things stand, the market seems convinced of the latter. I’m not so sure.

Closing thoughts

As we head into the second half of the year, my biggest takeaway remains unchanged: this is a market that continues to reward conviction.

Not recklessness. Not blind optimism. Conviction.

After all, the S&P 500 has spent the last few weeks grinding higher despite a closed Strait of Hormuz, oil north of $90, and bond yields hovering near multi-year highs. In almost any other environment, those would be considered meaningful headwinds. Yet here we are.

That’s not an argument for ignoring risk. It’s simply an acknowledgement of what price is telling us.

If stocks can continue climbing the wall of worry with all of those concerns hanging over the market, it’s worth asking how much further they might travel should some of those fears begin to fade. And in that context, SPX 8000 doesn’t sound too wild.

Maybe that’s the optimist in me talking.

But optimism, backed by a disciplined process and a willingness to follow the tape, has paid remarkably well throughout Q2. Until the market gives me a compelling reason to think otherwise, I’m inclined to keep giving it the benefit of the doubt.

5 restracks and 5 likes and I’ll make the paid trading chat free for the month.

Best,

Al

Disclaimer: This content is for informational and educational purposes only and should not be construed as financial advice. I am not your financial adviser. Always conduct your own research, consider your personal circumstances, and consult a qualified professional before making any investment decisions.

…software finally looks ready to step up here.

IGV is breaking back above the 200dema, with cyber names leading the charge.

Now the question becomes: who follows?

MSFT and PLTR still look like prime candidates if software breadth keeps improving. And if risk appetite really starts expanding again? Don’t rule out crypto joining the party too. I’m looking at you here HOOD.

Meanwhile, patience still feels like the smarter play in XLF. The setup’s interesting, but the tape hasn’t quite given the all-clear yet. Maybe it comes tomorrow, maybe next week. But if we’re going higher, I don’t want to see financials breaking down here!

New video live now - charts, levels and the rotation thesis broken down in full.

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Over the last few months, I’ve had a lot of fun framing the market through movie analogies and cinematic storytelling. It helped make sense of an increasingly chaotic tape - and, frankly, kept things entertaining.

But moving forward, I want to simplify things.

Rather than comparing every market regime to a Hollywood blockbuster, I’ll be focusing more on regular video updates breaking down my favourite setups, key levels, leadership themes and actionable opportunities as they develop in real time.

Alongside that, I’ll still be publishing the occasional deep-dive newsletter covering the bigger picture stuff I’m seeing under the hood - macro trends, risk models, breadth, sector rotation, liquidity and the overall health of the tape.

The goal is simple: less theatre, more clarity.

As always, thanks for reading, watching and being part of this little corner of the internet.

Let’s keep stacking good trades.

Al

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Why? Because if these names can reclaim that level with conviction, it likely signals a market environment where we can start getting more aggressive with risk exposure again - especially beyond the usual mega cap leadership.

Think of this less as prediction and more as preparation. Build the watchlist now, so you’re ready if the market starts opening the door.

A few charts in this video are already starting to lean that way 👀

As always, not financial advice. Do your own research.

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MVPs are the lifeblood of successful teams.

The Dodgers have Ohtani. The Yankees, Judge.

When these players are swinging, good things tend to happen for their respective teams. When they’re not, the opposite rings true - with a disproportionate amount of blame falling on those with the broadest shoulders (and beefiest salaries).

But what’s often forgotten in an age that values individual brilliance and celebrity, is that no matter how good the individual, its the supporting team around them that truly makes the difference when it comes to the crunch.

The movie Moneyball brings this truism to life.

Led by Brad Pitt’s Billy Beane, Oakland A’s built a roster around overlooked players who quietly got on base and kept the machine moving. And the results - well, no spoilers here, but it didn’t work out too bad in the end.

That’s what healthy markets tend to look like, too.

And in my view, the next leg higher in this bull run boils down to just that.

Not just semis swinging homers every week, but the bench stepping up to the plate and getting on base too.

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Playing Conditions Look Good

Before taking a look at some of the benchwarmers primed and ready to take the field, a scout’s report on the current regime.

Risk models - which can now be accessed here, for free - remain in the all-clear zone, with credit spreads and volatility trading at the lower bounds of the range.

Breadth remains the primary concern here, with the percentage of S&P 500 stocks trading above their respective 50dema dropping to below 50% as of yesterday’s close.

Am I concerned about breadth in isolation? Not really.

Some will point to the slight deterioration over the last couple of weeks as a reason to tighten up. But I prefer viewing breadth as part of a wider composite and right now, most of the tickers I track within that framework are still giving the green light.

Until that changes, I’m willing to give the rotation thesis detailed below a chance to play out.

Benchwarmers Taking the Field

As detailed in last week’s post, I have little to no interest in chasing semis up here.

Instead, I’m scanning the market for those downtrodden areas that look primed and ready to breakout and keep the bull market swinging.

Top of the order, you guessed it…software.

Here’s a super quick view of IGV. Note the huge volume spikes at critical support, as well as price trending higher above the AVWAP from the prior lows, as well as the now upwardly-mobile 20DEMA and 50DEMA.

Dig beneath the surface of IGV and you’ll find MSFT. To me, this looks primed and ready for a major move. Above the diagonal purple line is what I’m looking for here, and feel comfortable holding calls above the AVWAP from the prior lows (green line).

Next up, healthcare. Specifically IHE.

Huge volume spikes and coiled moving averages, inject it baby!

Like software, this looks primed for a big move - and so long as price holds above the AVWAP from the prior highs, I’m happy siding with the bulls on this one.

My favorite name in this space, BMY.

Cup and handle. Inverted head and shoulders. I don’t care what you want to call it. To me this looks primed and ready to resolve higher from its multi-month base.

Last but by no means least, XLF.

Looks good to go, no?

Bulls get this thing cooking above that diagonal purple line and it’s game on.

JPM is my preferred vehicle for trading this thesis. Price holding above major support and the AVWAP from prior lows. Work to do to capture those key EMAs, but I’m happy holding until we see a decisive close below this week’s low.

Potential Curveball

For every team that wins the World Series, most never even get the chance to swing the bat.

Markets aren’t dissimilar in this regard. Even in strong bull runs, leadership narrows, rotations stall, and plenty of stocks get left stranded in the dugout (pour one out for your homies that own NKE).

Right now, the broader setup still looks capable of going the distance. The tape is constructive, key risk gauges remain supportive, and potential rotation under the surface is helping keep the playoff dream alive.

But this is no victory lap.

There are still more than a few pitchers warming up with curveballs capable of blowing up the bull thesis altogether - sticky inflation, rising yields, weakening breadth, geopolitical risk, and an increasingly crowded AI trade among them.

The game’s still on, no doubt.

But whether this run can go the distance relies on whether the bench step onto the field whilst the MVPs take a much-needed breather.

Best,

Alex

I’ve just launched a new chatroom for all subscribers: Watchlist & Setups.

No fluff. No “BREAKING 🚨” every five minutes. Just a focused stream of annotated charts, levels, and tickers currently on my radar.

Inside the chat I’ll be sharing:

• Stocks and sectors I’m actively watching

• Key support/resistance levels

• Annotated chart setups

• Relative strength and leadership names

• Potential breakout/breakdown candidates

• The occasional “this looks horrendous, avoid it” chart too

Not every chart becomes a trade. Not every setup triggers. But it’s the cleanest way for me to share what’s actually on my screen in real time.

What About Trade Alerts?

The Trade Alerts chat remains reserved for paid subscribers only.

That’s where I share actual positions, entries, exits, updates and higher-conviction ideas in real time.

But Watchlist & Setups gives everyone access to the process behind the scenes - the names, levels and themes I’m tracking before they potentially evolve into trades.

Available to all subscribers. Click here to access the chat.

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I’m not an economist.

But given said collective’s record when it comes to forecasting economic output and equity performance, I’m definitely not complaining. As the old saying goes, the only reason God created economists was to make weathermen look good.

At the time of writing, the usual suspects are doing their best to scare you.

This includes the leading academics you’ve seen doing the rounds on the BBC and CNBC, as well as some of the more niche names you’ve undoubtedly come across on social media.

Here’s a smart-sounding take from Henrik Zeberg, shared last week…

And here’s another, equally smart sounding take from the same account, posted back in December 2024 - just months before we saw one of the greatest bull runs in recent memory…

The point here isn’t to dunk on the likes of Henrik Zeberg or any other economist for that matter. I’m sure they have their reasons for being so bearish on the economy (those subs won’t sell themselves!).

Instead, I’d simply like to highlight that for as long as I can remember, economists have been getting it wrong. Or to put it bluntly, straight up lying to us for years.

Data Don’t Lie

Human beings lie all the time. Whether we’re lying to ourselves or others, it’s just part of the deal.

But data is different.

Data doesn’t care about political affiliations, TV ratings, engagement farming, or whether some economist on CNBC needs to justify the forecast they made six months ago.

It just is.

That doesn’t mean data can’t be interpreted poorly. It can. But raw numbers don’t wake up in the morning deciding to push a narrative. They don’t get emotional. They don’t go on podcasts. They don’t panic because the S&P is down 2% or suddenly declare a “new paradigm” after three green candles.

And that’s why I started building my own economic dashboard.

What you're looking at here is a composite of leading indicators, namely: building permits, housing starts, single family permits, 10Y-2Y spreads, initial jobless claims, weekly hrs worked and manufacturing orders from 1990 to March of this year.

The red line shows the 6mma, yellow shaded areas are recessionary periods.

What you'll notice is that prior to each recessionary period shown on the chart, leading indicators trended lower for a number of months (24 prior to the 2008 GFC) prior to each recession hitting.

No duh, leading indicators doing exactly what they're supposed to do!

Where Are We Now?

Just look at the chart.

When the composite moves from the bottom left to the top right, it signals the US economy is in an expansionary phase - good news for bulls.

When the opposite happens - and the blue/red lines trend lower - contraction is in play, often preceding recessionary periods like those witnessed in 2008.

Right now, both lines are trending higher, having recovered strongly after the slowdown seen throughout 2021 and 2022 - which, not coincidentally, aligned with the market’s last meaningful bear market.

Could this change as early as next month? Sure - but trying to predict it is akin to reading tea leaves. So for now I’m happy sticking with the data we actually have.

On that note, it’s important to understand that economic data is never truly “live.” Almost every datapoint in this chart is released with a lag. Building permits, manufacturing surveys, employment data, claims, credit conditions - they all arrive weeks after the month they actually represent.

In other words, we’re always looking slightly through the rear-view mirror.

But markets are forward-looking.

That’s why I focus less on individual data points and more on the direction of the composite itself.

Is the weight of the evidence improving or deteriorating?
Are leading indicators stabilizing or rolling over?
Is economic momentum accelerating or fading?

Right now, despite all the doom-scrolling, panic headlines, and endless recession predictions, this chart simply doesn’t look like an economy in collapse.

Have a great week.

Best,

Alex

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