Don here...
The S&P 500 hit a new all time high this morning on soft inflation data. The NASDAQ did not.
Gianni Di Poce has been tracking this divergence for weeks. His warning is simple: the longer the NASDAQ fails to confirm, the more dangerous this market becomes.
He calls it "Modern Dow Theory." Classical Dow Theory compares the Industrial Average to the Transportation Index. Gianni's version compares semiconductors to the NASDAQ 100.
The semiconductors have already hit new all time highs. That's normally bullish because they tend to lead. But without NASDAQ confirmation, the signal remains incomplete.
There's another wrinkle. The Supreme Court may rule on tariffs tomorrow. If this market is looking for a reason to sell off, that could be the catalyst.
Here's what Gianni covered in tonight's video:
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Consumer discretionary was last week's top performing sector. Even the equal weight version hit new all time highs. That wouldn't happen if we were about to roll over.
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Basic materials are strengthening across the board. The Trinity Terminal is flagging more stocks in this sector than energy, signaling the rally is real.
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Silver hit $89 but RSI is showing bearish divergence. Upside momentum is waning and further gains aren't worth chasing.
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Bitcoin is approaching its January 5th high. A breakout would flip the trend bullish.
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Crude oil is at a critical juncture. A clear of $62 targets $65 to $67. Above that, $75 to $77 comes into play.
The Fed came out today and said they're in no rush to lower rates further. Powell has only months left as Fed Chair, but the tension with the administration adds another layer of uncertainty.
Click here to watch Gianni break down the exact levels and what happens next
Don Kaufman
Chief Market Strategist, TheoTRADE
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