Dear iFlip Users,
Another week, but this time we didn’t see any new highs on the Nasdaq. There is no doubt in my mind that a near-term market top is in the offing. The Dow and the S&P 500 made new highs, but they are doing it with little enthusiasm with a light volume. These all-time highs should be met with skepticism.
Many bell weather stocks and ETFs are off their all-time highs. Notice Amazon and ARKK. Amazon is 10% all-time high achieved just two weeks ago, while Kathy Wood’s ARKK (a great bet last year) is making new time lows (-33% at the time this is written). I also suspect ARKK to go much lower. Why? As Bill Clinton liked to say, “it’s the economy, stupid”… well, that’s the reason. We all know that the economy is poised to strengthen through the remainder of the year. The last bit of the economy will take longer because the labor force is tight, despite having an 8 million remaining jobs to be filled to achieve pre-covid unemployment rates. The responsibility of this remains squarely on the US government. I believe we are at the beginning of wage-price inflation, which is what we saw at the end of the Jimmy Carter presidency. Inflation is always a problem for everyone. The markets cannot escape this reality, and so far, it appears that we have not learned from that sad part of our economic history.
Enough of my views. They are what they are. In the end, I rely on the math and what the A.I. is telling me. The primary iFlip S&P500 SmartFolio (aka Tactical) benchmark remains out of the market and will not likely buy back into the market until a price for the SPY is underneath 400. That represents a correction of at least another 5-7% as of the date of this correspondence. Many divergences support this view in all aspects of the various markets, including volume, put/call ratios, CC debt, mutual fund cash positions, government spending, Fed balance sheet, and many, many more. Should the SPY (S&P500 ETF) retreat occur, not all of the markets will suffer equally. Commodity-based assets should continue to outperform (outperform means they will not go down with the same intensity as tech stocks and/or retail plays). I remain sanguine on the iFlip A.I. Red Oil SmartFolio as this energy sector remains strong with XOM hitting new highs. SPY-I’s mix represents recovery in different sectors, which means it will also outperform.
I have also observed stocks that many people think of as “dogs” are doing well despite the sloppy behavior of the indices. An example being AT&T hitting new highs and offering a decent dividend. See the chart below.
The best thing you can do in these times is let the A.I. SmartFolios do everything for you. This is why you invested with iFlip. They can make rational decisions regardless of the circumstance.
Have a great week,
Kelly and the iFlip Team