WEEKLY TAKE 3/12/23 – RISK REMAINS ON THE MENU

Outlook: The SIVB and SI failures dealt a big blow to the inflationist camp. It appears the economy cannot shoulder higher rates, which suggests a resumption of disinflation over the coming months as well as lower yields (sideways at best). This, on top of a bullish macro backdrop defined by seasonal tailwinds and dollar weakness, has me heavily weighted tech. My view is bolstered by the relative outperformance of QQQ to SPY and the remarkable resiliency in crypto at a time when fears are high.

QQQ: Has broken out of the bearish trendline and will continue its ascent following this retest which is further supported by a rising channel stemming from a double/rounded bottom. Targets 330.

SPY: Recent weakness calls for caution, though I do not believe SPY will close below 380.

QQQ/SPY: QQQ is poised for further outperformance, breaking out of a pennant formation aided by bullish divergence on the RSI. The inflation driven broad selloff is over and a new bull rally is underway. 

BTC: The sharp rally off a retest of the bear trendline will hammer out the bottom of this minor retracement. The death cross will prove to be a false omen and BTC will penetrate the secular SMA (currently 24,500).

ETH: Bullish reversal in ETH/BTC suggests ETH is the crypto to own right now. ETH is similarly hammering out a bottom that will propel it above its local high of ~1740.

Gold: The pullback in gold ended 3 weeks ago and the plummeting probability of a terminal rate above 5% only adds fuel to the fire. Targets $2000/oz and higher. 

DXY: Dollar weakness will continue as we finish the right shoulder of a classic topping pattern.

10Y: Peaked in October of last year (my call) and is beginning a new leg down. Support at 3.5%