MAY 21 2023 UPDATE

Signals from Mr. Market and 2 new stocks I am adding this week.

Important: this is not investment advice. Consult a licensed financial advisor before making any investment decision.

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The market is sending some encouraging signals, especially in a few sectors. So I am adapting to it.

The Sp500 is in an uptrend although not a strong one. Looking at the equal weight index below, is clear that participation is low, meaning that mostly big stocks are going up and small and mid-caps lagging, possibly an indicator of worry about recession:

When we look at the Nasdaq, we find a clear and convincing uptrend instead:

While the Nasdaq equal-weight shows some more participation:

Last, defensive sectors like Consumer Staples, Utilities, and Healthcare start to have a bearish look. Below is the Consumer Staples sector equal weight chart:

Not a collapse but last week some deterioration started, suggesting some rotation towards Technology and Consumer Discretionary and even Industrials.

So what?

My take is that the market is realizing that the technology sector will stay strong in any economic environment because of all the hype there is around AI (artificial intelligence), robotics, automation, etc.: areas of the economy that will keep growing unless a catastrophic type of crisis like in 2008 or COVID-19 hits us again.

Despite any interpretation, the charts are showing me improvement in cyclical sectors out from defensive sectors.

Investors right now are overweight defensives and underweight cyclicals. So they might need to rebalance their portfolios if technology and Consumer discretionary keep ripping up.

A complete shift has not happened yet. I see cues that it might happen soon unless really bad economic data starts coming out.

We’ll see how it develops.

Looking at ETFs, I see signs of strength in technology-related ETFs. See the WisdomTree Artificial Intelligence Fund below and the high amount of interest it had last week as the volume shows:

Looking around the world, Brazil, Japan, and Israel indexes are looking good right now.

PORTFOLIOS UPDATE (POTS)

10X LARGE-CAP MOMENTUM POT

Here is what I am doing this week:

• Raising RMD 0.00%↑ Stop Loss to $217

• Creating a STOP BUY ORDER for 16 AMAT 0.00%↑ shares at $127. If triggered, my initial Stop Loss will be set at $108.9 or about -15% from the current price.

AMAT 0.00%↑ is breaking out from a lateral consolidation on heavy volume. Also, it’s part of the Tech/AI theme discussed above. Let’s ride it.

I also like APP 0.00%↑ GLBE 0.00%↑ and LYV 0.00%↑ but they do not offer a good risk/reward entry point right here. I might be wrong, but I prefer to wait for a better entry.