Happy June to my Slope family! Since we are knocking around the window of time, I’m looking for a major top in the stock market, I wanted to review some charts I think are set up to take advantage of a possible bearish second half to 2024. I was looking around the internet last night to see if there were any important happenings around this date to mark this important occasion. I came across a few…
Today is Elizabeth Hurley’s birthday. Meow. It’s also Sundar Pichai’s birthday. No meow. Not exactly what I was looking for… and then I found the below. On this date in history, June 10th, something electric happened.
“In the summer of 1752—possibly on the 10th of June—Benjamin Franklin flies a kite during a thunderstorm to collect ambient electrical charge in a Leyden jar, enabling him to demonstrate the connection between lightning and electricity. (Scholars debate the June 10 date, but agree it likely happened sometime in June of that year.) It is one of his most famous—and mythologized—experiments.”
“Franklin became interested in electricity in the mid-1740s, a time when much was still unknown on the topic, and spent almost a decade conducting electrical experiments. He coined a number of terms used today, including battery, conductor and electrician. He also invented the lightning rod, used to protect buildings and ships.”
Let’s take a look at four positions that I am currently holding short. I own January 2025 puts on each. First up, let’s take a look at IWM. Below is the daily chart of IWM going back to its top at the end of 2021. After its initial powerful decline during the first half of 2022, IWM has been largely consolidative since. The first half of this year has seen IWM develop what appears to be a nice intermediate term topping pattern, as the small caps have continued to diverge from big tech.
Next up is a TnR favorite, IYR. Commercial real estate remains an unresolved peril, and I believe it will be a front and center participant in a possible bear market to come. The chart has maintained a clean series of lower highs and lower lows since the beginning of 2022. During this year, that pattern has continued, with IYR negatively diverging from the broader market. I think the next stop for IYR will be a test of the October lows of last year.
I’ll close with two individual stocks that I like short for the remainder of 2024. UPS and Alcoa. If we are going to see a major slowdown in the U.S. economy, it will show up in UPS. The stock saw a large boost in 2020 due to Covid and the stimulus that accompanied it. UPS has also been trending down since early 2022. I have noted the levels I feel can used as good pivots for trading around support and resistance. This looks like a good long term top to me.
Alcoa’s chart has been more aggressively bearish since its 2022 top. After making an initial bottom in October of 2022, Alcoa went on to make a more impressive bearish move during 2023. The October 2023 bottom marked a 76% decline off the 2022 high. The past few months have seen a healthy bounce back in the stock. Alcoa has begun to weaken to start this month, and I think the stock is well-positioned for shorting.
Good luck to all for the remainder of 2024. I’m no Roaring Kitty (GOOD! – Ed.), but I think we’re at a very important top, bro.
