A Little Different Post…

I usually try to steer clear of short-term comments on the markets, but with all the developing changes I am going to divert a bit with some short-term stuff I saw this weekend while working on the Annual Picture.

1. It is obvious that retail stocks believe the economy is going to improve, whether it does or not will be a big 2026 story. With that in mind it is interesting to watch the restaurant stocks, where it is evident that what we are seeing is mostly buying cheap stuff and selling stronger stuff, just look at Chipotle, and Darden, vs McDonalds.
2. The XLU chart shows it is thinking interest rates are topping.
3. The worst ETF for anyone to be in appears to be the Junk Bond ETF SJB. Is there a contrarian move developing.
4. AI stocks look solid on a long-term basis, short-term it seems the more visibility the more pressure.
5. I like to watch the JOET ETF for a glimpse at the conservative mindset, it seems ok at the moment.
6. The Long XLE / Short OIL trade shows how the oil mindset thinks Trump provides it a lot of cover against alternatives.
7. Emerging markets are confirming a real walk away from U.S. chaos.
8. The crazies in BTC, DJT, and MSTR, are trying to establish a rally base at current levels, but the long-term picture looks rather bleak.
9. Related to the trading environment, Animal spirits are in the doghouse, with the overall short term trading environment decidedly negative. This Aspect will continue until Trump settles down. In the meantime, big long-term money is holding the fort with the belief that deregulation and productive efficiency will carry the day. Gold and Silver topping remains the easy way to watch for stocks to accelerate again.
10. One more thing to mention. Possibly a note of caution. There are a number of stocks that have been crowd favorites during the whole rally from the April 2025 lows, stocks like META, ORCL, ANET, NFLX, PANW, XYZ, MSFT, AMD, PLTR, SNOW, CRWD, HIMS, to name a few, that are down more than 10 percent since the October 29th early S&P high at 6916 was reached. Overnight we are testing that level on the S&P. This group of stocks will need to find legs, it anything positive is going to how soon.
11. Back on January 6th we outlined the structure of the Climate Tech Model. Tomorrow I will share charts showing how the 4 divisions look. The contrarian approach to select stocks for the model tend to take a pass on the crowd type of stocks listed in point 10 above.
12. And lastly, allegedly the U.S. Supreme Court will provide a ruling on the legality of the Trump tariffs this week. The rumor mill says that the tariffs will probably be ruled against, but given a little time, that Trump will try to put at least some of them back on using a different concept.