Tao Economics

Navigating Economics Cycles for Preservation and Survival

This is a good follow up to my S&P warning / Nvidia warning

Darshan shows that oil as a 10 year leading indicator for the S&P

From Dorsey Intel.

The Reckoning Has Arrived: my latest fix on McClellan's ~10 year leading indicator (https://lnkd.in/eF6YbgeM) paints a grim picture. Expect 🐻bearish Risk OFF market behavior through the end of the year, followed by a relief rally ~ Q1'25. Despite higher volatility ahead, good arbs (🐂long:short🐻) exist in BTC:Tech (AAPL,QQQ), DefAero(BA,EADS,NOC):Cyclicals(F,TSLA,XLY), and Coal,Steel,Wood,Paper:Semiconductors.

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Giving a heads up here. If you have large retirement accounts, it would be good to check the index funds you are invested in right now.

Here are the current weightings of the S&P 500 index.

https://www.slickcharts.com/sp500

Top 3 below:

1 Microsoft Corp MSFT 7.02%   

2 Apple Inc. AAPL 6.99%   

3 Nvidia Corp NVDA 6.27%

If you are heavily invested in a S&P 500 index fund, 20% of your holdings are in these three stocks.

All 3 are fantastic companies, but extremely overvalued. Especially Nvidia, which is reminiscent of Cisco Systems during the 2000 tech bubble.

If you have $100K in a S&P index fund, then $20,000 of which would be in these three companies.

You may also have some overlap from other funds.

Chart wise, Nivdia is looking bearish short term ~2 months.

Given that, I don’t know what these stocks will do tomorrow, next week or next month. They could always go higher. This post is so that you are aware of what is in your retirement account and if you are currently comfortable with this allocation.

If not comfortable, it would not be a bad time to re-adjust.