Episode summary
Katie Stockton Still Sees a Bull Market. So Why Is Her ETF Only 50% in Stocks?
Excess Returns
· · 42 min · Hosts: Matt Zeigler, Justin Carbonneau · Guests: Katie Stockton
Summary
Katie Stockton argues that the secular bull market is still intact even though the tape has become unusually narrow. The S&P 500 and NASDAQ 100 are at new highs, but market breadth has weakened sharply, with many stocks below key moving averages and some sectors in downtrends. She treats that as a correction in breadth rather than a definitive top, emphasizing that cumulative breadth measures are still technically in uptrends and that short-term oversold readings could support a snapback.
Her more important caution is that momentum has deteriorated in several areas outside the mega caps, especially in semiconductors and the broader equal-weight universe. Stockton says breadth divergences are usually poor timing tools on their own, but they can foreshadow weaker price action, so she is watching credit spreads, the VIX, and whether semiconductor leadership persists. She also sees Treasury yields in a resumed uptrend after the break above 4.75%, which could pressure rate-sensitive areas.
On positioning, she says the Fairlead Tactical Sector ETF now holds about 50% in equities and the rest in short-term Treasuries, long Treasuries, and gold. She remains constructive on semis, sees gold as a potential hedge despite its downtrend, expects crude oil to stay volatile within a broad range, and believes Bitcoin has already likely set a major low.
Key takeaways
- Stockton says the secular and cyclical uptrends remain intact even as breadth has weakened and leadership has narrowed to mega-cap technology.
- She treats the recent breadth deterioration as a correction rather than a market-top signal, but says it could still be the start of something worse.
- She sees the 10-year Treasury yield breakout above 4.75% as a meaningful shift that supports higher yields and may weigh on some market segments.
- Her main longer-term warning sign is widening credit spreads, which she says are more consistent with a bear-market reversal than a simple pullback.
- The Fairlead Tactical Sector ETF is roughly 50% in equities and 50% in defensive assets because the rules-based model has turned more cautious.
- Stockton says Bitcoin likely put in a major low and the BNAV ETF will use trend following to scale between 70% and 150% exposure.
Notable quotes
“the secular bull market is very much alive and I'd say mostly well at this point despite all the chatter right now about market breath and otherwise”
“Breakouts are among the most actionable things on the charts. So when we see one, we should usually respect it”
“we do think that a major low has been established”
How the episode opens
You're watching Excess Returns, the channel that makes complex investing ideas simple enough to actually use. Better questions lead to better decisions. Justin Carbono is with me. I'm Matt Ziggler. Our guest is the founder and managing partner of Fair Lead Strategies, Katie Stockton. Welcome back to Excess Returns.
Thank you so much. Good to be back. — Well, it's fall and luckily nothing has happened all year. All the charts are just flat. We've got barely anything to talk about. How have you been, Katie? It's been pretty wild, hasn't it?
I'd say it's been more than a little bit pretty wild. So, let's get into some charts. Let's get some stuff on here.
Last quarter, we talked about this short-term loss of momentum within the long-term uptrend, which is why your unique perspective is valuable here. Where do we stand right now from a long-term perspective looking at the S&P? Yeah, I mean listen, the secular bull market is very much alive and I'd say mostly well at this point despite all the chatter right now about market breath and otherwise the cyclical uptrend is even also intact.
Um it has deteriorated to some degree x the large cap indices. So S&P 500 just reached a new high. So did the NASDAQ 100.
So, we've had that concentrated leadership and that has been constructive. So, if we consider the market to be the S&P 500, well, we're in pretty good shape. Although, it's not been an easy tape for people to navigate.
Talk to me a little bit about long-term overbought and where we are moving away from some of those indicators right now. Yeah. So, long-term overbought conditions are very much widespread, I would say, and they do impact the major indices. Now, we did see over the summer months some deterioration in the monthly indicators and it was concentrated of course in the same areas that we saw downside leadership during that correction.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- market breadth
- treasury yield breakout
- sector relative strength
- tack etf defensive positioning
- bitcoin and tactical allocation
Companies and tickers mentioned
- Fairlead Strategies
Watch the episode
Watch “Katie Stockton Still Sees a Bull Market. So Why Is Her ETF Only 50% in Stocks?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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