Excerpted from the May 10th edition of Notes From the Rabbit Hole
While I am a gold bug, I am not a narrowly focused bug. In the markets I want to increase capital, where ever that can be achieved. The last several months of portfolio diversification have provided a solid increase. But it is time now to rebalance and tighten the focus. That is illustrated in much more detail in the segments that followed this one, in NFTRH 914.
SPX Target Registered
I seriously had no clue that SPX was even close to target, let alone realized it had hit the 7400 measured target yesterday, until I took a look yesterday afternoon. Though upside targets are seldom stop signs (at least mine aren’t, they are objectives laid out well ahead of time), it does give me a bit of pause.
As I watch certain holdings go vertical (QCOM, DDOG, SYNA, FTNT) after other holdings (MRVL, ALAB, etc.) had done so previously, I wonder, could my timeline [for the bull to run through the balance of 2026] have been pulled in that far? Probably not. But a correction can come at any time.
The 2025 pattern objective measured to 7400, we’ve had it in view for nearly a year, and now it is no more. With the wildcard in the Middle East still in play, anything that goes wrong on that front could trigger a correction. Or if peace breaks out, the machines could sell the news.
Or it could simply be “happy days are here again” as joy spreads across the land (yeah, right) and Trump and Warsh (with a little Bessent whispering sweet dovish nothings in his ear) get to work. Let’s also not forget the big, beautiful, pro-business bill.
Back to the chart, it has earned a correction if one is to come about any time soon (we’ll check in on sentiment below). But the market has busted bullish, near-term correction potential notwithstanding. Any corrective activity now would be expected to test the 6950-6750 range (lateral support/SMA 50 and SMA 200).
SPX is an amalgam of large companies from a multitude of sectors. So within its makeup, there are rotations. For example, Healthcare has been very weak*, while Semi, broad Tech and Growth stocks have been strong. Inside the index Materials, Industrials and Value stocks are quite firm. Lately, Software, which caught a beating on AI hysterics (some of which are valid for some companies) have been in recovery.
Considering the internal rotations, I have been trying to stay in tune. For example, adding laggards/beat downs like DDOG, ZS, FTNT and PANW (several of which have since caught on to the bull) while trimming profits in the bottle rockets. For example, MRVL was sold, ALAB trimmed and on Friday QCOM and SYNA were also trimmed. The general plan is to re-seed elsewhere in areas that may look to rotate ‘in’ over the coming months. In other words, rebalance.
This article only discusses the US “stock market”, but our interests are also very much in precious metals, commodities and key global markets.
* There are at least two disruptive themes in play right now. The first, which we all know, is AI. Who benefits from it and who is impaired? The second is the effect of widespread adoption of GLP-1 weight-loss drugs. Of note are NVO and LLY. I’ve got them on my watch list as NVO rallies off the lows and LLY takes a correction of sorts. But the important point here is that the prospect of people losing weight leads directly to people avoiding the need for as many medical procedures. This explains why the Medical Device industry and other aspects of Healthcare are getting woodshedded much like Software stocks have in the face of AI. Progress, you know. We’ve got to stay ahead of it.
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