You Know What's Rallying? Hint: It's Shiny and It's Not Stocks

Let’s talk about the group rotation. I know many of you think I am ridiculous when I say this but if you have owned Meta for the last few months, are you making any money? If you have owned the banks, are you making money? Not like you are in say, the metals or the speculative quantum stocks.

There was a nice pop in drug stocks but that was over in a few days, although they really ought to give it another try on the upside. The homies had a good run, but that has evaporated. The retailers are mixed. Energy sits there like dead weight.

Last week I said I thought  (KRE) , the ETF to be long regional banks would make its way to that uptrend line before the correction was over. There was a merger/deal announced on Monday and still KRE couldn’t even get to the mid-September high let alone the early September high.

I will grant you that it still hasn’t tagged that line yet, despite being down but do you realize it’s essentially trading where it was in July?

The Bank Index (larger banks) is now trading the lowest since late August. I would expect that finds some support at hat line (145-146) but we’ve got the S&P at a new high and financials are lagging. We’ve looked at the asset managers and they haven’t been great. The brokers might be seeing all these IPOs and deals but the XBD is flat since July.

Someone said to me but tech has been awesome. Has it? Meta is down over ten percent. Amazon too. In fact to give you an idea about sentiment I keep noting Meta should be okay down here and no one seems to care.

But I know everyone wants to talk metals. The rally in the metals gave us a day off from talking about AI and all the OpenAI deals we seem to get daily. I mean, CNBC’s Fast Money, which I watch daily, normally can spend the first fifteen minutes talking about Apple or NVIDIA spent the first block of the show talking precious metals and copper!

Gold has gone parabolic. I have said I cannot chase it and it has rallied every day since. But Wednesday saw my old friend Palladium move. It was up ten percent on the day. That’s what happens when folks get giddy, they will buy anything that hasn’t moved, and Wednesday they discovered Palladium.

Just look at that volume. If you squint hard enough you can see that these high-volume moves tend to see pullbacks thereafter. This is a five-year chart. My initial target is in the 130-140 area but I do think that it ultimately goes higher. The Daily Sentiment Index (DSI) is now 83. A few days ago it was in the 60s. A pullback in the next few days would be helpful to the group rotation.

Gold’s DSI is 86 and Platinum is at 84. We haven’t seen any of them over 90 yet but I am incapable of chasing them here.