We have seen a rotation from AI themes to more defensive plays since November, with DJI outperforming. Now the question is whether the defensive trade is coming to an end, and what comes next. Will the market re-embrace AI themes? I don’t think so.

The patterns below are rare. SPX and DJI have not completed their final legs, which partly explains the recent choppy tape, while NDX completed its final leg earlier and has been in distribution mode for the past few months.

Commodities and equities have followed our script. Gold and silver have made new ATHs and are pushing toward our targets of 5K and 100, respectively, while SPX, NDX, and DJI have started to reverse. I’ve warned about this several times, but I’ll reiterate it once again: the sharp rise in gold and silver is not good. It’s very, very, very bad. Historically, moves like this have often been followed by major equity corrections, and I expect this time to be no different.