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Daily LOLR STS
Up Up Up
7/0 3/4 4/3
Breadth: 214/-189
NYMO: +35 Falling Intraday
NAMO: +29 Falling Intraday
NYSI is Rising
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A shift in leadership that began weeks ago is accelerating, making it impossible to ignore. From last week’s article:
“Just one month ago, the market murmured with subtle whispers of change, so faint that most overlooked their significance. In our April 7 publication, “The Little Things,” we sounded the alarm on these whispers, highlighting a class of securities that had long lingered in the shadows, unnoticed by most.
As detailed in that article, subtle yet meaningful signs hinted at a shift in the market’s risk dynamics, serving as early warnings to the astute observer. Some of the game’s most prominent players and sharpest minds began migrating from “risk-on” to “risk-off” assets, such as gold, silver, utilities, consumer staples, healthcare, and discount retailers—sectors relatively resilient against economic downturns—havens of safety from the storm.
What drives this pivot? The foresight of the “smart money.” Their anticipation of an impending recession sculpts market trends as they preemptively seek refuge in defensive sectors. These sectors typically outshine the broader market BEFORE economic shifts become evident to all. Those attuned to evolving sector strength seize the advantage, adapting their strategies to embrace forthcoming opportunities.”
The emergence of leadership in risk-off assets has become impossible to ignore. This week, we’ll examine that emergence further, looking at some of the most striking examples of this new leadership and what it signifies.
To provide a baseline for comparison, let’s first visually examine the year-to-date SPX 500 Average—the standard against which we compare all of the following new leaders.
While the Russell 2000 and the Dow Jones Transportation Average fell far short of their 2021 peak levels, the following SPX chart shows that this widely recognized standard bearer managed to set an all-time high this week:
In the meantime, though, the Risk-off standard bearer gold has surged to an all-time closing high on Friday, May 17, 2024, as “smart money” seeks refuge:
GOLD Monthly Chart:
Risk-off silver has surged even more dramatically through Friday’s close, up 40% in a month:
Utility issues, which generally are very stable, low-beta issues, are producing the most significant surge (15% in a month!) we’ve seen in decades:
Risk-off consumer staples, exemplified here by consumer staple ETF VDC, are moving sharply higher through Friday’s close:
Discount retailers, exemplified here by consumer staple ETF XLP, are being bid higher as smart money stays a step ahead of the crowd:
That the trading crowd is nearly universally unaware that money is rapidly shifting to and spiking the prices of traditional safe havens from economic adversity is no coincidence, nor is it a small thing.
Nearly all that even take some slight notice have no appreciation of the importance of this shift.
We needn’t assure you that it is genuine and potentially catastrophic for markets ahead. You are among those paying attention.
To encapsulate the urgency and gravity of the situation, we draw inspiration from a poignant scene in the film “Margin Call,” where the character John Tuld, portrayed by the incomparable Jeremy Irons, delivers a chilling truth:
“There are three ways to make a living in this business: be first, be smarter, or cheat.” He went on to say, “Well, I don’t cheat. And although I like to think we have some smart people here, it sure is a hell of a lot easier just to be first.”
We’ll examine the overnight futures at 9:15 Monday Morning.
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