Summary

Michael began by outlining that there's a major top developing in stock indexes, and we may have already seen it. Defensives to outperform. A top in tech, not led by the major names. A lot of tech stocks below the top names are getting whacked this week. Computers and software. Software is one of the most overvalued groups and cloud software group stocks are topping and rolling over. Don’t sell or short FAANG yet, but short the smaller tech names. In Europe retail has been a terrible under-performer and the personal and household goods super sector in Europe is a short. In the US strongest ideas are utilities, staples, REITs, and potentially energy coming up. The strongest sector to outperform S&P ratings In the Belkin model forecast are utilities. When the model starts coming up with these defensives outperforms, it's usually a bear signal for the market. Consumer staples is a long and you can't get any more defensive than that. They're pretty much despised and disparaged at the moment, bottomed out on August 27th. To outperform: Proctor and Gamble, food and drug retailers, personal good, but food is not quite there yet. Utilities, consumer staples are the top two sector outperform ideas into year end from the model forecast. REITs, the real estate sector is moving this way too. In Europe utilities is also a current long idea from the model forecast, as is telecom. Insurance has been a big underperformer but it's starting to outperform. Energy could be coming up in Europe, it's a fresh signal, it has underperformed but may be approaching. There are not a lot of long or outperform ideas in Europe. There's a lot of stale long ideas. The Belkin model also tracks inflows and, in the US, last week there was only 1 billion in total inflows. Michael highlighted that this week’s report was called 'lowest hedge fund shorts since January'; the market's way up in the clouds, people are nervous, but what being said and what’s being done seem totally detached. The market is really overvalued, price to sales at an all-time high for the S&P 500 and we may have hit a high. The model on stock indexes is pointing to a major top. Model indicates a major top in US bonds as well as bunds, guilt, everything over there in Europe. So, bonds topping after a rally. The Belkin model went long the dollar on July 19th, and the long-term forecast is up. Forecast for volatility points up, buy volatility. That means buy put options, put options are still relatively cheap. Play it with the VXX ETF and if you've got a cast iron stomach you would buy the dips in that, there are huge sellers in it all the time.

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