Research Summary
The report discusses the current state of the US equities market, highlighting the short-term backdrop and the reasons to remain long. It also covers the recent job numbers, inflation data, a potential long USD play, and a nuclear stock that seems to have bottomed out.
Key Takeaways
US Equities Market Outlook
- Strong Trend in US Equities: Despite the market trading near all-time highs, many traders are attempting to short the move. The report suggests it’s better to stay long until the trend changes, given the high Trend Fragility readings and recent shift in rate cut expectations.
- Market Internals Divergence: There’s a growing divergence from market internals, which is typically seen before short-to-intermediate term tops. However, these divergences can persist for weeks before a trend ends.
Job Numbers and Inflation Data
- Positive Job Numbers: The report indicates that the recent hot jobs data, showing a change in the six most cyclical sectors, is not indicative of an imminent recession.
- Inflation Trends: The report doesn’t have a strong view on the short-term path of inflation but notes that the trends in annualized core CPI are turning up again.
USD and GBPUSD Outlook
- Potential USD Pop: The DXY has the most bearish speculative positioning out of all the major pairs currently. With shifting expectations around US rates, a USD pop could be on the horizon.
- GBPUSD Breakdown: The GBPUSD could trigger a short on a breakdown from its recent sideways rectangle pattern.
Investment Ideas
- Bullish on Mexico: The report is bullish on Mexico over the next 3-5 years and highlights Consorcio Ara, a company that makes affordable housing in Mexico, as a potential investment idea.
- NuScale Power Corp: The report mentions NuScale Power Corp, a maker of small modular nuclear reactors, as a potential investment idea. The stock has found a firm floor around the $2.75 level after trading as much as -88% off its post-SPAC listing.
Actionable Insights
- Monitor US Equities Trend: Investors should keep an eye on the US equities market trend and consider staying long until the trend changes.
- Watch Inflation Trends: It’s important to closely watch the trends in annualized core CPI as they are turning up again.
- Consider USD and GBPUSD Positions: Investors might want to consider their positions in USD and GBPUSD based on the current market outlook.
- Research Potential in Mexican Stocks: Given the bullish outlook on Mexico, investors might want to research potential investment opportunities in Mexican stocks, such as Consorcio Ara.
- Revisit NuScale Power Corp: Investors might want to revisit NuScale Power Corp as a potential investment idea, given its recent performance.
