Release Valve or More Wood to Chop?
Hello All,
To jump straight into it, following the recent unwind in the overall Momentum / AI trade, the group finally found a bottom late this past week after the Q's had endured nearly two months of underperformance relative to both the Dow & the Russell.
And with this recent rebound, the Q's are, of course, leading the way this week, up just over 140bps, whereas on the opposing side, Small Caps along with the Dow are among the ‘worst’ performing of the indices, although both are essentially flat on the week.
For anyone who wants to follow an actively managed portfolio in real time:
I’ve joined Plutus as the cleanest, day-to-day way to track an actively managed portfolio in real time. It’s a live dashboard that’s broader, more diversified, actively managed by me, & updated continuously.
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Once your Plutus account is approved, you’ll have the option to allocate right away. If you do, it’s straightforward: create an account, link your brokerage (Available only for IBKR at this time), & select the Eliant Flagship (or any of the baskets I’ve built). Your money stays in your account, and trades, position changes, and rebalances are replicated automatically so there’s nothing manual to manage. The idea is to make it easier to access an actively managed portfolio run by me without the overhead of traditional fund structures or high minimums, whilst you keep full custody of your assets & I stay focused on research, positioning, and portfolio construction.
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Earlier in 2024, we launched a series titled Educational Pieces, covering a wide range of topics, many of which were suggested directly by you all (4-Part Series).
For those who may have missed the first installment, it covered topics including:
General background / knowledge on all option strategies
In-depth talk on risk / reversals & how to go about expressing / utilizing them
Options Structuring
When to used naked calls / puts vs. spreads
Choosing expiration dates
Identifying key pivots / supports / resistance zones
General briefing on stock gaps
What to look for in regards to fundamentals
Implementing fundamental / macro / technicals into a trade
Hedging
Creating risk/reward setups
Taking profits / managing losses
Overall Process
Book recommendations
A link to the original Educational Piece can be found here .
Given the positive feedback and how useful many of you found the first installment, we followed up with Educational Piece: Part Deux earlier in 2025 & for those who may have missed, a link to the piece can be found here & we then went on to release Educational Piece: Part Trois which can be found here.
And finally, the most recent installment, Educational Piece: Part Quatre, can be found here.
‘Risk management is the silent prerequisite for compounding & true wealth is built not by chasing the highest returns but by ensuring the survival necessary to realize them.’
Before we jump into the recap, looking at the week thus far, as we highlighted earlier, it's largely been characterized by a rebound in momentum / growth-oriented names, with both standing as the best-performing factors on the week.
On the other side of the rotation however, we've seen capital flow out of the lower-volatility / value-oriented groups as individuals look to re-risk following the recent washout in momentum & many of the market's favorite crowded trades.
And in regard to the specific factors and or ‘baskets’ we’ve built on Plutus, here are the best performers year-to-date:
1. Industrial and Auto Analog Recovery
2. AI Full-Stack Infrastructure
3. Mission Critical Security Stack
Whereas on the flip side, the worst performing baskets year-to-date have been:
Moving along, despite the indices hanging out near the highs as the choppy summer grind has continued, recently we've started to see a bit of deterioration in overall upside participation / breadth, which in turn has led to a bit of a drop-off in the % of stocks above the 20D, which currently sits near 44% & remains within neutral territory. It isn't quite signaling a shorter-term oversold condition yet, but is slowly starting to encroach that way, whereas it certainly isn't signaling any shorter-term overbought conditions either.
Although on a broader timeframe, given the recent dispersion over the last few weeks, as really only the AI / Momentum factor took a meaningful hit, which in turn led to a big surge in upside participation across a number of sectors / stocks, the % of stocks above the 50D still remains healthily within neutral territory, sitting around 55%. Again, it's not giving either an overbought or oversold signal, but instead sits right in the middle from a medium-term perspective.
That said, despite the indices sitting just off their highs, with Spooz specifically only just under 200bps from its highs, the Fear & Greed Index still sits within ‘Fear’ territory, which again emphasizes that markets remain far from true euphoria or the type of positioning extremes typically associated with major and or interim tops.
Historical context of the Fear-Greed Index overlaid with the S&P:
