Reading Between The Lines | Trendlines Over Headlines

Key Takeaways

• Watch for the S&P 500 to break and hold above 4180 resistance; if it fails to hold this level as support, expect a sharp move lower. Conversely, a sustained breakout above 4200 would likely attract more investors and confirm a bullish trend.
• The NASDAQ 100's historical pattern shows exceptional gains (20%+ so far in 2024) during the first 7 months of pre-election years; this seasonal tailwind technically continues through end of July, suggesting continued upside potential.
• Small speculators are at historically extreme net short positions (lowest in database history), which contrasts with their typical wrong-sidedness; historically, when they're betting against the market, the S&P gains ~17% with a 90% win rate over one year.
• Monitor the Tech-to-Energy sector ratio on a 24-month moving average basis: when tech outperforms, S&P historically gains ~13% annually; when energy leads, only ~3%. The ratio just turned positive again and is trending higher, signaling potential bullish follow-through.
• Mark June 30, 2023 as a potential turning point for commodities—a 30-year cycle analysis shows 15-year bullish commodity periods (averaging 300% gains) starting every 30 years, with the next cycle due to begin around that date; use ETFs like DBC to capitalize if the trend emerges.