SPX & QQQ NOTCH ANOTHER HI, WHILE MID/SMALL CAPS COIL; PLUS, OUR UPDATED 21/21 & TURBO-12 LISTS

Summary of Financial Strategies, Market Analyses, and Business Trends

• Market Overview & Trend Analysis:
  • The market is in a sustained uptrend since late April, confirmed by multiple technical indicators (all six major indexes above their 21-day, 50-day, and 200-day moving averages).
  • S&P 500 and NASDAQ 100 hit new all-time highs, while mid and small caps are consolidating, showing a "double inside day" pattern indicating a potential breakout in the direction of the primary uptrend.
  • Breadth is weak despite new highs, as indicated by equal-weight indexes underperforming market-cap weighted indexes.
  • Sector rotation is active and healthy, with money shifting between growth and value sectors rather than exiting the market.
  • The VIX rose slightly due to hedging ahead of the upcoming FOMC meeting but overall volatility remains low and consistent with a healthy market.
  • The US dollar is weakening, boosting precious metals like gold and silver to new or near all-time highs.
  • Bond prices are rising (yields falling), continuing a downtrend in interest rates.
• Key Technical Observations:
  • S&P 500 and NASDAQ 100 show consistent positive momentum above key moving averages.
  • Equal-weight indexes and smaller caps show relative weakness but are coiling for potential moves.
  • Russell 2000’s double inside day signals a potential breakout.
  • Tracking of percent of stocks above their 5-day moving average reveals only 43% participation, a secondary indicator signaling breadth weakness but also potential for rotation or pullback.
  • Stochastics and other momentum indicators remain positive.
• Sector Performance:
  • Strong sectors: software (enterprise, cloud), semiconductors, uranium (boosted by government strategic reserve plans).
  • Weak sectors: oil, home builders, biotech, basic materials, financials (banks), staples, healthcare.
  • Growth sectors outperformed value sectors on the day.
• Portfolio Management Strategies:
  • Emphasis on following rules based on index and leading stock behavior: cut losers, focus on winners.
  • Use of volatility-adjusted beta and balance at risk metrics to manage portfolio risk (Project Rex is being updated to better handle mutual funds).
  • Core portfolio allocation includes S&P 500 to capture sector rotation.
  • Transparent portfolio management with regular updates on buys, sells, and risk metrics.
  • Dual mandate portfolios: “Grow” for uptrends and “Turboction” for aggressive growth with protection in downtrends.
• Updated Stock/Leader Lists:
  • Turbo 12 List: Includes long-term leaders and two new additions:
    • Met C (coal and rare earth metals)
    • Ion Q (quantum computing stock with a recent breakout)
  • Other notable stocks: Irene, Tempest, Unity Software, Rocket Lab, Bloom Energy, Pan-American Silver, Wayfair, Credo, Carmen Holdings.
  • 21 over 21 List: Stocks trading above both 21-day and 50-day moving averages, including Robin Hood, Reddit (added recently), Snowflake, Tesla (added recently), DoorDash, GDX, Seagate, AppLovin, Credo Fortite, First Solar, Cloudflare, Take-Two, Valero, Carvana.
  • Emphasis on diversification across sectors, avoiding concentration in only software, chips, or AI.
• Noteworthy Events:
  • Tesla’s stock reacted positively after Elon Musk’s $1 billion buyback.
  • Uranium stocks benefited from government announcements on strategic reserves.
  • Upcoming FOMC meeting and press conference seen as a key event, causing some hedging activity.
• Methodology / Step-by-Step Approach:
  • Monitor key indexes relative to 21-day, 50-day, and 200-day moving averages.
  • Track market breadth via percent of stocks above short-term moving averages.
  • Identify and follow market leaders using proprietary lists (Turbo 12, 21 over 21).
  • Adjust portfolios based on volatility-adjusted beta and balance at risk metrics.
  • Use technical patterns (e.g., double inside days) to anticipate potential moves.
  • Maintain transparency and discipline in portfolio management, cutting losers and adding to leaders.
  • Watch sector rotations to balance growth and value exposure.
  • Prepare for macro events (like FOMC) by hedging as needed.

Presenters / Sources:

• Don Vandenborg, Chief Investment Officer, Rever Asset Management
• Mention of team members Ted and Connor (portfolio managers)
• Partner Dan Stewart (contact mentioned)