Outlook: There is nothing not to like about this rally, as has been the case all year, and yet we still have broad bearish sentiment alongside large sums of neutral positions in retail portfolios and institutional funds. What started off as an “oversold bounce” was eventually characterized as a “bull trap” followed by an “AI driven bubble.” As long as this rally remains unloved, with disinflation and high employment persisting at the macro level, I remain bullish. It’s worth noting that M2 remains 19% above pre-covid trend at the same time breadth begins to expand into cyclicals. A neutral posture seems insane, let alone a bearish one.

SPY: Don’t fight the tape! A 9.5% gain to start H2 is an omen of what lies ahead as the S&P 500 eyes new all-time highs. Buy the dip on an obvious retracement on a brush against prior resistance.

QQQ: Continues to dominate the bullish action and will continue to do so in the face of expanding breadth as AI remains a strong catalyst. Prior deviations from intermediate trendlines suggest a target of $408 before a mean reversion event becomes highly probable. 

DXY: A strong rally following the breakdown below 100 has me less convinced of further downward pressure temporarily, but I do not see a rise above 104. Sideways for now.

Treasuries: Positioning appears out of sync with inflation expectations and I expect another downside miss in CPI versus consensus will help drive rates lower, helping to solidify an end to Fed tightening.

Crude Oil: Recent strength has been impressive, but action remains sideways. My conviction changes on a weekly hold above $83.5.

Bitcoin: In the prior three pre-halving years, Bitcoin’s H2 performance has been -50% (2011), +88% (2015), and -33% (2019). The strength in equities and tech heavy mega caps in the face of weakening dollar, peak policy, and a resumption of falling rates (my forecast) leads me to believe 2023 will be closer to ’15 than ’11 or ’19.