Markets look to have bottomed on 3/13, coinciding with the surge of fear into mid-March. The resulting bounce happened on much higher than average breadth and volume, making a tell-tale technical low that many refused to believe given the lack of proper downside volume capitulation. Technically speaking, the rebound in momentum as a factor looks important, as this group was hit hard in recent months. Furthermore, the combination of cycle composites bottoming coinciding with fear having spiked to multi-year highs was an important development. As discussed, most “Magnificent 7” issues experienced short-term deterioration only and had failed to break weekly uptrends. Moreover, SPY, QQQ, and DJIA have now successfully exceeded their downtrends created in February, and the Elliott-wave structure looks positive for a meaningful move up into April. While it’s difficult to call for indices to carry straight higher back to new all-time highs without any meaningful backing and filling, I feel like any stalling out and pullback happens from much higher levels and likely begins sometime in May. Overall, it looks right to favor Growth stocks and overweight Technology, Financials, Industrials, and Consumer Discretionary.
I’ll forego my normal discussion of Equity indices given that the upward ascent looks to be ongoing and should arguably begin to accelerate in a more meaningful fashion into early April. While some investors have chosen to hold off on overweighting US Equities given the possible additional tariffs announced on April 2, I feel that Equity indices successfully bottomed on 3/14/25 and can rally ahead of this possible tariff announcement afterward.
However, for those still unsure about US Stocks, I will turn the attention towards Gold stocks which have been showing stellar performance in recent weeks. Moreover, this surge has actually allowed Gold stocks to outperform Gold this year, which doesn’t always happen in tandem.
As shown below, when eyeing GDX on weekly charts, it’s important to mention that the VanEck Gold Miners ETF (GDX) rose last week to the highest weekly closing price since January 2013, more than a decade ago.
While the intra-week highs from 2020 still need to be surpassed ($45.78) this looks to be something which should happen into April as Gold’s ascent continues. My initial upside target for GDX lies at $55 and above this would allow for a push back to all-time highs in the mid-$60’s.
The top Gold names that I find attractive at present are AEM, AGI, RGLD, KGC, and AU
VanEck Gold Miners ETF
Gold Stocks have outperformed SPY nine out of the first 12 weeks this year
The recent outperformance in Gold stocks vs. SPY and Gold itself might seem unusual, but this same outperformance happened at the same time last year.
GDX showed better strength than US Equities (as gauged by SPY) from late February into mid-October of last year before settling.
Now, this outperformance has kicked in again. The ratio of GDX to SPY moved higher two weeks ago to the highest levels since early 2023, more than two years ago.
However, similar to early 2024, counter-trend signals have begun to crop up slowly (TD Sequential is in place but not confirmed, while TD Combo is early by at least a week), which might warn of an impending reversal back lower.
To be clear, this DeMark-based exhaustion is not perfectly in place yet, nor has it been confirmed. Furthermore, confirmation might just signal that US stocks begin a more meaningful period of outperformance, which likely means that Technology, Financials, Industrials, and Discretionary might all outperform Gold stocks in 2Q.
GDX/SPY
At present, Gold is bullish, and I expect a move to 3280. Furthermore, Gold stocks, as per GDX, are also bullish, and I expect a rally of up to at least $55 in GDX (from its current $45.02).
However, there remain a fair number of investors who aren’t quite convinced yet about the durability of the rally in US stocks, given the negative weekly momentum coupled with the recent deterioration in price. Thus, it looks like additional outperformance should happen in GDX vs. SPY into early April, which should bode well for GDX showing better strength than SPY.
At present, I like owning both GDX and SPY, but if/when a TD Countdown 13 signal appears and is confirmed on the weekly ratio chart of GDX to SPY, then it will be time to weigh SPY a bit more heavily. (For now, this is arguably premature.)
Homebuilders likely can stabilize here after 20% losses in XHB
Interestingly enough, despite the pullback in many Homebuilder names from all-time highs in 2024, the intermediate-term trend for XHB (SPDR Series Trust Homebuilder ETF) has not been too adversely affected.
Furthermore, the XHB weekly chart now lies at the bottom of the weekly cloud and has begun to stabilize.
Thus, while the group has been under notable pressure lately, facing analyst downgrades amidst affordability issues and higher mortgage rates, I can find some technical reasons to be optimistic about this group from a short-term counter-trend perspective.
Technically speaking, the ability to recoup $102 in XHB would serve to improve short-term technicals in two important ways:
Initially, this would exceed the downtrend line, which has been intact since November.
Second, this would allow XHB to recoup the prior lows from early January, which broke in late February.
Thus, while the larger trend remains very much intact, the short-term trend has begun to stabilize and very well could turn more positive on just a bit more technical strength.
Favorite names among the Homebuilders and Construction stocks include: HCI, TT, LII, PHM, and BLD. Some evidence oof strength in the weeks ahead would help many other names like TOL, DHI, LEN, begin to show some strength that would make these more technically attractive.
SPDR Series Trust SPDR Homebuilders ETF
SPY vs. ACWI has not violated its long-term uptrend
Following 2.5 months of SPY underperformance vs. ACWI (All Country World Index), many believe that US underperformance might be a theme to consider for 2025, given tariff uncertainty.
However, the monthly chart highlighting the ratio chart of SPY vs ACWI helps to reinforce the relative long-term attractiveness of US stocks. As can be seen below, SPY vs. ACWI as a relative ratio has not violated long-term uptrends going back more than a dozen years.
Thus, while the monthly reports from Bank of America detailed that the Fund Manager Survey results showed the largest drop in US Equity Allocation ever, I feel that technical analysis would suggest this might be an overreaction.
Until/unless long-term charts of SPY to ACWI can roll over meaningfully enough to show more evidence of trend deterioration, it remains right to “buy the dip” in US stocks and consider the mean reversion towards international stocks to be an anomaly that likely cannot persist.
Overall, I like overweighting US Stocks vs. ACWI for 2025. My view is that the US Dollar decline won’t persist into 2026 and that tariffs likely won’t prove as damaging to the US Economy and by extension, the US Stock market as many are suggesting.
SPY/ACWI
