Daily Briefing - 15/04/26 - Tout repose sur UN secteur 😆

The speaker begins by revisiting the short-term S&P 500 situation, noting extreme volatility and market exhaustion rather than aggressive movement. The recent 10-11% rebound over three weeks, while brutal, is seen as a sign of an impending range on the daily chart. While an "historic buying opportunity" is not impossible, many factors contradict this optimistic view. The speaker emphasizes caution regarding the current market rally, especially since the S&P 500 is nearing historical highs and algorithmic trading is likely targeting stop losses. The speaker warns that the channel is not officially broken, and a reversal pattern (bearish harami or evening star) could form if the market closes below the trendline today. The 6900 point level represents a dense technical zone. The core question is whether the market will continue its straight-line ascent to new historical highs or if this is another "bull trap." The speaker believes short-term technical analysis is limited due to the current "buyer squeeze" driven by algorithms. Instead, a long-term perspective is needed to determine if the recent monthly sell signal was a trap for sellers or if the current rally is the real trap. The speaker expresses serious doubt that the market can sustain the gains of the last three weeks. To understand the nature of this rebound, the speaker analyzes the S&P 500's components and their long-term structural valuations since the last trough. While most sectors like energy, materials, health, and consumer staples have seen gains between 600% and 1500% (including dividends), two sectors stand out: industrials (1500% with no clear price structure, indicating a vertical surge) and technology (an extraordinary 3500%). The speaker highlights that the technology sector, the largest component of the S&P 500, has driven a significant portion of current valuations, a phenomenon built during this economic cycle and now reaching "bubble-like" profitability levels with no underlying structure. Zooming into monthly charts, the energy sector has seen a strong recent rally but is far from its long-term contexts. Maximum potential declines could be 45-50%, reaching strong long-term monthly supports. The speaker is not bearish on energy but questions whether sector companies will capture value, suggesting potential state intervention to reduce margins during economic slowdowns and stagflation. Industrial values show no structure, confirming a "bubble" with contexts completely "torn apart." This sector is expected to be bullish until it turns bearish, without forming a range. The speaker projects a minimum 45% decline for industrials to return to their average value, noting their heavy weighting in the market. Materials, a cyclical sector, show closed volatility bands and a speculative push. The speaker anticipates a market peak, a return to the lower band, and a 35% decline, which is considered a bear market but logical in an economic contraction. The health sector gave a cyclical signal in late summer 2024 and is now pushing higher, but volatility bands are closing. A 23% decline is expected, with healthcare potentially outperforming during a downturn (i.e., declining less than the index). Consumer staples, also very cyclical, show a range signal. Despite current excesses, a return to the lower band and averages is expected, with potential 30% declines in response to an economic recession. Financials have given a valid monthly sell signal, indicating an excess above targets. A reversal is expected, breaking the buying context and returning to the average, potentially a 40-50% decline over two years. The speaker states this is one of the sectors they short the most. Discretionary consumption also has a confirmed monthly sell signal and is expected to reverse, returning to its average with a potential 50% decline. The technology sector (XLK), with its 3500% gain, is identified as the "worst of the worst" and essentially *is* the S&P 500 today. The XLK has given a monthly sell signal, and the speaker believes it must return to its mean within 2-3 years, implying a 55-60% drop for US tech. This explains the speaker's expectation of a 40-45% decline for the S&P 500. While cyclical components will also decline, they are expected to find support quicker, around 30% down. The overall S&P 500 structure is viewed as a pullback, returning to valuations that would be attractive for a final cycle. However, the speaker cautions against investing in the US for this cycle, especially for foreign investors, due to potential dollar devaluation offsetting gains. The recent rebound in the S&P 500 is primarily attributed to the technology sector (XLK). Other sectors like energy, materials (showing signs of a peak before descending), industrials (range signals), healthcare, and consumer staples (zero rebound) are not contributing significantly to the current rally. Discretionary consumption is also concentrated in a few values and shows signs of continued decline. Financials, despite a rebound, have already given monthly sell signals. The technology sector is at the top of its channel, with everyone pushing for continued growth. However, if technology valuations fail to make new highs, even after touching the channel top, the channel will break, and the market will retest previous bottoms and gaps. The monthly signal for tech has already been given, and if the current rebound is a "bull trap," it originates from technology stocks. Failure to sustain the monthly close would validate the sell signal. The speaker concludes that the short-term market is illiquid, concentrated, speculative, and dangerous. A minor misstep could lead to a 40% drop in tech values. This market is concentrated in Nvidia and semiconductors. Nvidia, seen as the biggest speculative bubble ever, is trying to chase liquidity. A simple consolidation of Nvidia would be a 40% drop, which would not invalidate its long-term bullish structure. However, if Nvidia falls, it will drag down the entire tech sector and the S&P 500. The speaker questions whether technology can defy the economic cycle, especially with rising oil prices. The current short-term tech rebound is seen as a classic rebound before a continuation of the already initiated monthly sell signal on Nvidia, potentially leading to the collapse of the "immunity" of American technology. The speaker acknowledges a significant drawdown in their own S&P 500 positions, having erased all gains and now being in a loss. They have chosen to increase their risk tolerance from 2% to 5% on the S&P 500 rather than triggering stop losses at historical highs, which they deem "stupid" given no invalidation of their long-term strategy. This decision is transparently shared, along with the intention to reduce exposure in other strategies like gold or Nasdaq to manage overall risk. The speaker emphasizes that the current market situation is an "absolute denial" of underlying economic cycles and risks, driven by an extremely speculative rebound that resembles a bull trap. They advise extreme caution, highlighting that the bubble is compressing into Nvidia and semiconductors. If Nvidia breaks its $160 support, semiconductors could lose 50%. The true indicator, according to the speaker, is the semiconductor index, not just Nvidia. A "VTO" (volume at the top) on semiconductors would confirm the bull trap. The speaker points out that over two weeks, some sectors have seen 17% gains with 80% profit margins, which is unprecedented. They believe the bubble, if it bursts, will start with semiconductors, pulling down Nvidia, then the tech sector, and finally the S&P 500. The first S&P 500 support is expected around 20% lower. The speaker maintains that short-term excesses do not invalidate their long-term strategy and direction.