A Little Vacation Break here…

It seems time to review what has transpired in the markets since the initial foray into over valuation mode on March 8, 2024.

The wait from the March 8 date has been tedious, but last Friday our Hedge Model signaled that the total market is ripe for a significant sell-off.

This Hedge Model uses four 3X Short ETF’s, SPXS, SQQQ, SOXL, SSG, that cover the S&P 500, The Nasdaq 100, and two different Semiconductor indexes that have led the move.

Today is a time to review the hedge Model trade positioning that is in the process of evolving with a list of the mile markers and the Hedge Index at those times:

1. March 8, mkt reaches over-valuation level, index = 150.66

2. April 19, mkt has first sell-off, index = 192.62

3. July 5, Model signals hedge, index = 99.70

4. July 11, mkt completes top formation, index = 92.07

5. July 11, start of hedge accumulation, index = 95.60

Here is a 30 minute bar chart that allows you to see the picture that is evolving. The Red line indicates the date the Hedge Trade was instituted. You can see the trade took some pressure based on its 99.70 entry index level for the first 4 days this week but is coming back to that level today with the trade currently at 97.70.

In the Bigger Picture if this rollover follows a conventional pattern, my guess is we will see money first move to small caps, then to T-bonds and then the overall counter trend macro move be signaled over when bonds top out due to government deficit concerns.

All this should occur between now and the end of the year when a new leg of the Bull Market commences. Unless Trump wins.