Overtime

Mailtime

Good morning,

You all brought the heat this month! We’ve got a ton of questions and chart requests, so no time to waste on an intro.

Let’s get into it!

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Questions

Do you anticipate a move to international stocks at some point in the portfolios? Or is the US still just too strong to allocate elsewhere?

With the dollar breaking down to 52-week lows last week, you would think this would be an ideal time for international investing. And foreign stocks are performing well, with the World ex-US ETF above all rising moving averages and hitting a 52-week high last Thursday.

Unfortunately, the issue remains the bottom panel, and despite recent underperformance from US large growth stocks, foreign equities have struggled to put together any trend in relative performance. I’m always monitoring for signs of a change but I see no reason to allocate to an asset class with this persistent of a trend of underperformance.

I have been using USFR for client short-term/liquid funds for the past year or two. What are some good alternatives to this fund with interest rates falling? IEI?

This question is a bit more philosophical and financial planning based, but I firmly believe that cash should be cash or something damn close (like ultra-short Treasuries). IEI is the 3-7 Year Treasury ETF and while it isn’t going to zero like an individual equity could, still has too much duration risk to be considered cash for my tastes.

Obviously, nobody knows where the Fed funds will be in a year, but for a frame of reference, futures are currently pricing in 2.75-3.00% as the most likely range in September 2025. That suggests cash could get you roughly 4% over the next 12 months, not exactly a huge step down from the 5% most people have gotten over the last 12.

In addition, while the “un-inversion” of 10s-2s has gotten a lot of press, the Fed funds rate is still well above the rest of the Treasury yield curve. The 5-year yields just 3.5%, which implies you would need to see additional declines in rates in the belly of the curve for IEI to outperform cash over the next 12 months.

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Chart Requests

ADSK: Autodesk

Old support, meet resistance. ADSK has been battling broken support from 2021 since early February. However, action since then has been a constructive basing pattern. Above all moving averages and at 6-month relative highs, I believe ADSK is likely to break through sooner rather than later and could target ATHs near $340.

APP: Applovin Corp

Great chart. Importantly, you are looking at the full history of APP, which went public just as the speculative boom was coming to an end. APP has now retraced a 90% drawdown and broken out to new all-time highs. $115 and $90 are first support levels.

CAVA: Cava Group

CAVA is making new highs and remains in a strong uptrend. This is a little too extended for me to like for new money, but as long as it’s above the 21-DMA (orange line) there is no reason to hop off the train.

CMCSA: Comcast

Comcast is working to the top of a 5-month bottoming formation and a move above $41 would target $46/share. My only qualms would be this is a poor entry point just below resistance and with 75% of SPX stocks above the 200-DMA, I would caution against focusing on the 1 in 4 that aren’t.

COKE: Coca-Cola Consolidated