A Monthly Market Review… [Dirty Dozen]

The concept that a market’s discounting mechanism is based on speculator participation, not price, is the most important thing that I know. ~ Jason Shapiro, “Unknown Market Wizards”

In this week’s Dirty Dozen [CHART PACK] we update the end-of-month technical, sentiment & positioning, and macro outlook for the broader US market (hint: odds still favor more upside), we then update our bullish USD thesis and end with a number of actionable trade setups, plus more…

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  1. June went out near its highs giving us a strong bullish breakout confirmation from the SPX’s year-long sideways consolidation. The measured move target for this breakout is around the Mar/Apr high at roughly 4,550’ish. 


  1. This is where the money has been flowing over the past month:

The Colombian Peso, Brazilian Real, and the Mexican Peso were some of the best-performing currencies against the US dollar over the last 30 days, while the Chinese yuan and the Russian Ruble were the worst. 

The top three performing sectors and industries were Global Jets (JETS), US Home Construction (ITB), and Consumer Discretionary (XLY) — this is not bearish…  

Midcap Value (IJJ) and Midcap Core (IJH) took top spot with smallcap and momentum leading in the style factors. 

And lastly, Argentina (ARGT), Mexico (EWZ), Nigeria (NGE), and Greece (GREK) were the top-performing countries globally. 

The charts below are from Koyfin. 


  1. Market internals (pictured below) continue to confirm the upward trend. A larger selloff is off the table until we see weakness and negative divergence in these areas of the market.  


  1. This year started off with a consensus in negative sentiment and bearish positioning. This is why we turned bullish in late 22’ and continue to be so. And while the Narrative Pendulum is swinging, the bears have been incredibly stubborn in admitting their error. As such, the market will keep moving higher until the last of that group cries uncle.

Two short-term sentiment/positioning indicators are stretched (AAII Net and Put/Call 10dma). But longer-term indicators such as aggregate US index fund flows and aggregate US equity index commercial positioning (bottom two charts) still have a ways to go before a proper sell signal is triggered. 

Our Trend Fragility indicator is now at its highest level since Jan 22’ but needs to get to 80%+ for a proper sell signal.


  1. Liquidity remains robust as the rate of change in yields and high yield spreads has come down since last Fall. 

I suspect we’ll see liquidity begin to tighten once again over the coming weeks/months as the market prices in higher for longer rates. But liquidity often has a long lead time on stocks. 


  1. The US Dollar (DXY) has been consolidating along the breakout level of its previous 7-year trading range. It’s in a developing compression regime, compression regimes lead to expansionary regimes (big trends). My guess is that we’ll see bonds break down and yields drive the DXY on another leg higher soon.


  1. Below is the aggregate trade-weighted yield spread oscillator for the DXY’s 2 and 10-year yield spreads. It turned up off its lows in May and continues to head up, providing an increasing tailwind for USD.


  1. PAVE, Global X’s Infrastructure development ETF broke out from a 27-month inverted H&S continuation pattern in June. 


  1. Here’s a snapshot of the ETF’s holdings along with the 3m % price change / holding weight for each. BLDR, a stock we highlighted in Jan (link here), has led the pack. 

Graph via Koyfin. 


  1. Innovator IBD 50 ETF (FFTY) completed a bullish breakout from a 6-month rectangle-basing pattern/compression regime. 


  1.  Nobody talks about the cannabis trade anymore. It’s a completely bombed-out sector. And VRNO, which is one of our favorite operators in the industry, has a left-for-dead stock chart. 

I don’t have an edge on when needed regulatory reforms will finally get passed but this stock can be played like a call option. Put a small position on. Have a mental stop below the $3.50 CAD level that has acted as support, and then apply a time stop for the trade to work out.


  1. I wrote about the bullish setup in Nintendo (NTDOY:US ADR) back in April (link here). We’ve since seen positive follow-through and the stock is back to trading above its monthly BB midline for the first time since the summer of 21’. 

I think this one has a lot of room to run.

Thanks for reading.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.