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The ARK Innovation Fund has been going down for a while now. In fact, I’ve become so used to ARKK underperforming the S&P 500 that I almost did a double take last month when I recognized that the trend appeared to have changed.

Today, we’ll discuss why this ETF has been a chronic underperformer, how the top holdings of ARKK have fueled a dramatic turnaround to a bullish phase, and what renewed strength in emerging technology plays means for the markets.

Endless Downside for ARK Innovation

There’s no denying that Cathie Wood has done an impeccable job marketing her firm and her methodology for identifying potential winners. The reality, however, has been a story of chronic underperformance.

In 2020, in the depths of the COVID pandemic, ARKK was up over 150% for the year. This far outpaced the 49% gain for the Nasdaq 100 and the measly 18% rise for the S&P 500. While we were wiping off every individual grape in the grocery bag and settling in for a long stretch of working from home, the technologies that allowed that to happen drove ARKK’s holdings to a strong year for performance.

In 2021, leadership shifted in a big way, with the mega-cap FAANG stocks starting to dominate our thinking, and the initial rally in pandemic names like PTON and ZM started to fizzle. ARKK was down 24%, while the Nasdaq 100 and S&P 500 both gained over 26% for the year.

In 2022, the bear market drove everything lower, and ARKK’s -67% for the calendar year meant it again dramatically underperformed the major averages. The Nasdaq 100 was down about 33% in 2022 and the S&P 500 shed 18% of its value.

That brings us to 2023, where the ARK Innovation ETF has gained over 60% year-to-date, tripling the return on the S&P 500 and far outpacing the Nasdaq 100’s 43% gain. The names that were hurting ARKK’s returns the most now appear to be driving the fund to a strong year of outperformance.

So basically, as long as emerging technology is considered market leadership, the ARK Innovation ETF has been a fantastic play to take advantage of that theme. Unfortunately, that has not been the case since 2020. Perhaps now, it’s time to revisit this theme?

Breaking Down the Top Holdings

Let’s go through the five top holdings of the ARK Innovation Fund, and see how this ETF has been able to turn around performance and turn up the returns.

ARKK’s biggest position is Tesla (TSLA), and it’s interesting to note that TSLA actually made a new low in January while the S&P 500 and Nasdaq bottomed out in October. After an initial rally to start the year, the stock pulled back in March and April before turning higher in May. That February peak was right around a 38.2% retracement of the November 2021 to January 2023 selloff.

Now we see TSLA is approaching “big round number” resistance around $300, which also represents the 61.8% Fibonacci retracement level. A series of price peaks around $310 tells me to expect resistance in the $300-310 area, shaded in green on my chart.

Coinbase (COIN) has ridden the crypto recovery theme higher in 2023, and this week brought further upside catalysts for a stock that has already tripled off its January low. The February and March highs just above $80 were my main resistance zone, and that was broken with authority this week en route to pushing above $100 and beyond.

Now, the August 2022 high is in play, and the extremely overbought conditions suggest to me that there is most likely more gas left in the tank. The kicker is that once COIN breaks above $120, there isn’t much technical resistance until all the way up to around $200.

The chart of Roku (ROKU) is the story of ARKK in a nutshell. The left two-thirds of my chart display a painfully consistent downtrend of lower lows and lower highs. But that just makes the clear higher low in May of this year that much more meaningful!

Now the stock has completed a classic rotation above the 200-day moving average, and this week pushed to a new swing high above $75. As long the $75 level holds, I would say this is a confirmed uptrend.

Now we have our first example of a key holding that still looks like it’s in a downward spiral. While all the previous stocks we discussed bottomed out in January, Zoom (ZM) actually made a new low again in May. For now, the $60 level has held as support, but I’ve not seen enough buying power on the chart to confirm an upside reversal.

The stock is now testing its 200-day moving average, which means it could “pull a ROKU” and complete that bullish rotation. But it just hasn’t done so yet.

Block (SQ) is another chart that I would say still has much to prove. The May low around $55 is right around the October 2022 low, so, for now, support has held fast. But until this chart pushes above well-established resistance around $90 (pink dashed line), I would consider this a basing pattern and not much more.

Renewed Strength In Forgotten Stocks

What does it mean that charts like ROKU have seen such a dramatic rotation from bearish phase to bullish phase? And how does that relate to the bearish divergences we’ve seen in the mega-cap growth stocks?

I would say this is part of a larger rotation away from the dominance of the FAANG stocks and into other areas of the market. And I think that’s not just about the smaller technology names and small-cap stocks, but also other sectors like industrials and financials, which are also catching a bid here.

The story of the first half of 2023 was a story of narrow leadership and the mega caps versus everything else. Now, we are seeing a bit of an “everything rally” that includes other asset classes like commodities and cryptocurrencies.

We still may see some bearish pullback scenarios play out, and it’s always worth considering the implications of a broader decline in the major benchmarks. But for now, the strength in charts like ARKK suggest that the bullish market phase has more upside in store.

RR#6,

Dave

P.S. Ready to upgrade your investment process? Check out my free behavioral investing course!

David Keller, CMT

Chief Market Strategist

StockCharts.com

Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation, or without consulting a financial professional.

The author does not have a position in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author and do not in any way represent the views or opinions of any other person or entity.

The House voted late Thursday night to prohibit the Defense Department from displaying non-approved flags, just weeks after the Air Force and Navy drew criticism for tweeting out pictures of rainbow banners to celebrate Pride Month.

In a 218-213 vote, the House approved an amendment from Rep. Ralph Norman, R-S.C., that would only allow members of the armed forces to display the American flags and other approved flags.

The amendment to the National Defense Authorization Act (NDAA) says only approved flags can be displayed in the workplace, common access areas or other areas of the Defense Department. Approved flags also include state flags, military service flags and others.

An aide to Norman said that while the Pentagon hasn’t flown a Pride flag – like the White House did in June – some military recruitment videos have shown this flag. And last month, the Navy briefly changed its Twitter banner to show a Pride rainbow, while the Air Force tweeted out a picture showing a silhouetted service member saluting a rainbow in a tweet that said ‘celebrate Pride month.’

The aide said the goal of Norman’s bill is to get ahead of the trend that has seen more and more agencies fly Pride flags. Norman’s language codifies a restriction put in place during the Trump administration that limits what flags can be flown.

During floor debate, Democrats said Norman’s amendment would hurt LGBTQ+ Americans.

‘With this amendment, my Republican colleagues are once again attempting to erase and to censure the LGBTQ+ community in our armed forces and in those workplaces,’ said Rep. Chrissy Houlahan, D-Pa.

‘With this amendment, anti-equality lawmakers are attempting to take up backwards by prohibiting service members and DOD employees from displaying the Pride flag, a symbol of strength and acceptance of the LBGT community,’ she said.

But Norman argued that it’s important for the Pentagon to fly approved flags that reflect the nation, not portions of the nation.

‘Flags mean something,’ he said. ‘Flags we wear on our sleeves, we honor it prominently on parade fields, we carry it in combat, we drape it over the coffins of those who’ve given their lives for this nation.’

Norman’s amendment was one of several that got a vote late Thursday night as the House raced to complete the NDAA this week. Several of those amendments reflected GOP priorities, such as eliminating what they call ‘woke’ programs at the department.

As a result, several Democrats on the House Armed Services Committee said late Thursday they could not vote for the final bill. ‘What was once an example of compromise and functioning government has become an ode to bigotry and ignorance,’ they wrote.

Among the amendments that were approved late Thursday was one from Rep. Elijah Crane, R-Ariz., that would ban DOD from making race-related training a requirement for hiring, promotion or detention.

After a 216-216 tie, the House voted again and narrowly passed another Norman amendment to eliminate all diversity, equity and inclusion offices at DOD. The House also accepted an amendment from Rep. Lauren Boebert, R-Colo., to ban DOD from buying pornographic and radical gender ideology books for libraries in DOD schools.

But the House turned away other GOP ideas, including amendments to ban funding for sustainable building materials and expenditures related to electric vehicles.

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An Iowa Republican senator revoked his endorsement of former President Donald Trump after he attacked Iowa Gov. Kim Reynolds on social media.

First-term Republican state Sen. Jeff Reichman announced Thursday that he now endorses Florida Gov. Ron DeSantis for president in 2024 after Trump slammed the popular GOP governor on his social media site, Truth Social, after she abstained from endorsing a GOP presidential primary candidate in 2024.

‘Trump is very outspoken. We’ve come to expect that, and that’s fine when it was focused at the right people,’ Reichman said in an interview with the Des Moines Register. ‘And then this week, when it became focused on our governor … I felt like it was the right thing to do to look out for our governor, our home team here. Keeping that in mind, I decided to pull my endorsement for Trump.’

‘I decided to pull my endorsement for Trump.’

— Jeff Reichman, Iowa State Senator 

Reichman added that Gov. Reynolds was ‘like family,’ and after Trump’s remarks, he decided to pull his endorsement and support Gov. DeSantis presidential run.

Trump claimed he ‘opened up’ the gubernatorial position for Reynolds in 2018, then endorsed her ‘when she fell behind.’

‘I don’t invite her to events!’ Trump wrote.

In a following Twitter post, DeSantis called the Hawkeye State’s governor a ‘strong leader’ who knows how to ‘ignore the chirping.’

‘Kim Reynolds is a strong leader who knows how to ignore the chirping and get it done.’ DeSantis wrote in a Twitter post. ‘She earned a landslide re-election because she delivered big results, and she is poised to deliver even more for Iowans in the special session.’

Trump in 2017 nominated longtime Republican Iowa Gov. Terry Branstad as U.S. ambassador to China. Reynolds – who was lieutenant governor at the time – succeeded Branstad as governor. The then-president endorsed Reynolds ahead of her narrow election in 2018 to a full term in office. Reynolds was easily re-elected by 19 points last year.

Former Arkansas Gov. Asa Hutchinson called Trump’s criticism of Reynolds ‘dictatorial,’ saying that ‘America deserved better than Donald Trump.’

‘No one should be attacked for declining to endorse a politician. That behavior is dictatorial,’ former Gov. Asa Hutchinson wrote in a Twitter post. ‘I applaud @KimReynoldsIA for welcoming all GOP candidates into Iowa. America deserves better than Donald Trump.’

Former South Carolina Gov. Nikki Haley called the governor a ‘conservative rock star’ in a Twitter post. ‘Like I always say, Iowa grows strong women!’

While remaining neutral, Reynolds has hosted a number of presidential hopefuls to her home state including former Vice President Mike Pence and South Carolina Senator Tim Scott.

Reynolds joined Casey DeSantis’ launch of ‘Mamas for DeSantis’ last week, a campaign to draw more women and parents to the DeSantis camp. 

The DeSantis campaign on Thursday also announced two new legislative endorsements from Rep. Josh Meggers, R-Grundy Center, and Rep. Matt Rinker, R-Burlington.

Thirty-nine Iowa lawmakers have endorsed DeSantis, according to DeSantis’ Never Back Down press release.

Sen. Reichman’s office did not immediately respond to Fox News Digital’s request for comment.

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FIRST ON FOX: FBI Director Chris Wray deflected when pressed before the House Judiciary Committee Wednesday regarding a recent federal court ruling detailing the bureau’s alleged suppression of conservative free speech. The group is expected to reconvene on Friday morning to further discuss whether to renew the Foreign Intelligence Surveillance Act (FISA).

The House Judiciary Subcommittee on Crime and Federal Government Surveillance will continue the hearing today at 9:15 a.m. ET.  

In Friday’s continuation ‘Fixing FISA, Part II,’ will examine the expansion of warrantless surveillance of Americans, the FBI’s abuses of the Foreign Intelligence Surveillance Act (FISA), and its failure to implement meaningful reforms. A group of House Republicans is urging Congress not to renew the FISA when it expires at the end of this year, a move those lawmakers say would curb the government’s ability to spy on U.S. citizens.

‘I think most folks are increasingly concerned about centralized power with our national security apparatus, given how political they’ve become,’ Rep. Matt Gaetz, R-Fla., who will introduce a resolution Tuesday calling for an end to FISA, told Fox News Digital.

‘I take great lengths in my legislation to point out that it’s both left-wing groups like BLM, and it’s also folks who were at the Capitol on January 6, who have seen their rights unfairly violated by FISA, and I’m equally aggrieved by both,’ Rep. Gaetz said.

Section 702 of FISA allows surveillance of non-U.S. citizens overseas, and when U.S. citizens are flagged in these investigations, the FBI takes over and can run a query on them for possible security issues.

But the FBI admitted in May that it improperly used warrantless search procedures on Americans more than 278,000 times in 2021, including Jan. 6 protesters and George Floyd demonstrators. The FBI has said it has taken steps to ensure this ‘unacceptable’ surveillance does not continue, but Gaetz and his supporters say the best move is to eliminate FISA altogether.

Congress will have to consider whether and how to extend FISA sometime this year, before it expires at the end of December.

Gaetz’s resolution will call on his colleagues not to renew the law. His co-sponsors include Reps. Marjorie Taylor Greene of Georgia, Paul Gosar and Eli Crane of Arizona, Thomas Massie of Kentucky, and Matt Rosendale of Montana.

FISA was passed in 1978 in the wake of the Watergate scandal and allowed the government to monitor Americans believed to be communicating with foreign agents. Its scope was expanded shortly after the Sept. 11 terror attacks via the Patriot Act, and has been renewed and lightly revised by Congress several times since.

‘It was reauthorized with some very insignificant reforms. Previously, people like Liz Cheney effectively watered down some of the strong warrant requirements that a lot of civil libertarians in Congress, myself included, had fought for,’ Gaetz said.

‘Since that time, and during this period of authorization, we’ve seen more than a million illegal FISA searches. We’ve seen creepy behavior like FBI officials searching information on their exes. And we’ve seen a total lack of oversight from the court,’ he said.

For years, FISA has generated criticism from both hardline Republicans and progressives on the left. While Gaetz’s new resolution only has GOP names attached, he stressed that fear of government overreach was bipartisan.

‘I have talked to a number of progressives in the past. We’ve been able to work with civil libertarian-minded progressives like Ro Khanna and Jerry Nadler, Zoe Lofgren,’ Gaetz said.

‘I’m hoping that cleaning out these abuses won’t just be a call to the political right, but that folks on the left will see the danger in this type of abuse of power,’ Gaetz added.

FISA was a big topic in Wednesday’s House hearing with FBI Director Christopher Wray, who has fielded fierce Republican criticism as a figurehead in what they say is an increasingly politicized Justice Department. The administration has repeatedly insisted that the department is apolitical.

The hearing is expected to continue on Friday, July 14 at 9:15 a.m.

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The House advanced legislation this week that would require federal officials to be trained up on artificial intelligence systems, in an effort to make sure agencies are as prepared as possible for this rapidly advancing technology.

Rep. Nancy Mace’s AI Training Expansion Act passed through the House Oversight Committee on Wednesday, and she told Fox News Digital ‘we’re doing everything we need to do’ for the bill to reach the House floor for a vote.

‘AI is going to change the way we live and we work, and we want to make sure that our federal workforce is prepared for the future and what that might hold,’ said Mace, R-S.C.

The bill, co-sponsored by Rep. Gerry Connolly, D-Va., would mandate that supervisors, managers, and data and technology workers whose jobs are linked to the federal government’s use of AI systems adhere to certain training requirements to ensure they properly understand the technology they’re using. It also updates the training guidelines outlined in the AI Training Act, which passed last Congress and was signed into law last October.

Sen. Gary Peters, D-Mich., chairman of the Homeland Security and Governmental Affairs Committee, introduced a similar piece of legislation in the Senate this year.

‘Congress will be the last place that is ready for AI, but we want to make sure that – small parts, to me, small parts make a big difference. And so we’re doing a small bill today that will help educate federal employees about advances in AI and uses of AI technology because it will make the federal government more efficient,’ Mace explained. ‘There’s so many benefits… we want to make sure that our federal workforce is more educated than they are today.’

While her legislation seeks to implement responsible guardrails on AI within the federal government, Mace distanced herself from the litany of efforts in recent weeks to impose regulations on the sector.

‘I think it’s premature to do that,’ the congresswoman said.

‘The government does this – we often overregulate, and when you overregulate, you’re going to stifle innovation. Costs go up. And we’re competing with China, we’re competing with other countries around the world.’

She added, ‘It’s hard to regulate something is going to be changing so quickly.’

Mace cited the European Union as an example, whose incoming AI regulations have been criticized by over 100 European companies, according to The Verge.

‘I don’t believe the government needs to be in the business of making technology framework happen. I believe that we need to be guided by industry. They’re the ones that are leading now,’ she said.

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The Biden administration’s criminal justice policies are riddled with contradictions and misplaced priorities allowing convicts and hard drug users to avoid punishment while simultaneously imposing measures that would turn many law-abiding Americans into criminals, according to a prominent U.S. senator.

‘This administration would make criminals of law-abiding citizens while granting actual felons early release and encouraging illicit drug use,’ Sen. Tom Cotton, R-Ark., told Fox News Digital. ‘No wonder Americans have lost faith in an administration that’s less interested in public safety than targeting political enemies.’

Cotton called out the administration for pursuing criminal justice policies that on one hand appear to take a softer approach to illegal drug offenders but on the other hand cracks down on pistol owners and cigarette smokers.

President Biden has long sought to cut the country’s prison population significantly. Biden joined the American Civil Liberties Union’s pledge to release half of the U.S. prison population while he was on the campaign trail in 2019, saying he’d ‘go further’ and release ‘more than’ what the organization called for.

Critics on the political left have blasted Biden for not following through on that promise, as incarceration in federal prisons has actually increased during his presidency. In April, however, Biden commuted the sentences of 31 people convicted of nonviolent drug crimes who were serving time in home confinement. The move came along with the president announcing an ‘Alternatives, Rehabilitation, and Reentry Strategic Plan’ that included measures such as removing barriers for convicted criminals in prison to vote.

Such steps appear to fit with the administration’s so-called ‘harm reduction’ strategy toward illegal drug use. The basic idea is not to focus on helping drug users achieve abstinence but rather on lowering their risk of dying or acquiring infectious diseases.

A central pillar of harm reduction is establishing ‘safe injection’ sites where addicts can inject themselves with street drugs such as heroin under supervision. Drugs users are provided with sterile needles to use, as well as tools to check drugs for fentanyl and other lethal substances. Those who take too much can be revived by on-site supervisors.

In May, New York University and Brown University announced receiving more than $5 million in grant money from the federal government for a study measuring whether overdoses can be prevented by safe injection sites.

Proponents of the harm reduction approach argue it could help stop a record number of overdose deaths largely caused by synthetic fentanyl. Others counter that the goal should be to help addicts quit with a comprehensive treatment plan, saying the administration’s philosophy will keep people on a cycle of addiction.

The administration especially caught flak last year, when Biden announced a $30 million federal grant program that would reimburse local governments and entities that provide safe ‘smoking kits,’ in the name of advancing racial equity and safer drug use for addicts.

The Washington Free Beacon reported that those kits would provide users with the ability to smoke ‘any illicit substance,’ including crack cocaine and crystal methamphetamine. The story also noted existing smoking kit programs in cities such as San Francisco, Seattle and Annapolis, Maryland, all include smoking pipes.

The White House and the Department of Health and Human Services repeatedly denied that crack pipes would be distributed on the taxpayer dime, but the Free Beacon subsequently reported that harm-reduction organizations in five East Coast cities — New York City, Washington, D.C., Boston, Baltimore, and Richmond, Virginia — all included crack pipes in their so-called safe smoking kits.

Amid the harm reduction approach, the Biden administration has simultaneously sought to impose tougher restrictions and punishments on certain gun owners and cigarette smokers, pushing rules that could end up classifying law-abiding citizens as criminals.

Last year, the administration’s Food and Drug Administration (FDA) released a plan for a nationwide ban on menthol cigarettes, saying the actions have the potential to significantly reduce disease and death. 

The FDA has said it can’t and won’t enforce the ban against individual consumers for possession or use of menthol cigarettes but will do so for manufacturers, distributors, wholesalers, importers, and retailers who manufacture, distribute, or sell such products within the U.S.

The Biden administration, with the support of Democrats in Congress, has taken various steps to crack down on menthol tobacco products, potentially impacting millions of Americans. In 2019 and 2020, sales of menthol-flavored cigarettes made up 37% of all cigarette sales in the U.S., according to the Centers for Disease Control and Prevention.

Beyond tobacco, the administration’s Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) is pushing a rule that categorizes pistols with a stabilizing brace as short-barreled rifles, which require a federal license to own. As a result, the rule requires gun owners to register pistols with stabilizing braces. Other options for gun owners include surrendering the firearm or taking off the stabilizing brace from the firearm.

Pistol braces are accessories that can be attached to the rear of a gun to make it easier to aim and fire with one hand. The accessories are often used by disabled veterans. 

Democrats argue brace-equipped firearms have been used in mass shootings and the regulation is needed to prevent more deaths and helps protect the public from dangerous weapons. Republicans say the regulation violates Second Amendment rights and would expose unknowing gun owners to criminal liability. Those who don’t comply with the regulation could face up to 10 years’ imprisonment or $10,000 in fines or both, according to the ATF. 

House Republicans passed a measure last month nullifying the ATF’s rule, but Senate Democrats rejected the measure. Cotton was among the senators to vote against the pistol brace rule.

‘Pistol braces are common, legal accessories used responsibly by most gun owners,’ Cotton said in a statement at the time of the vote. ‘Yet this rule will turn many Arkansans into felons almost overnight. The Biden administration and Senate Democrats are once again ignoring the fact that stopping gun violence starts with tougher sentences for criminals who violate gun laws, not more regulations for law-abiding gun owners.’

Biden threatened to veto the bill overturning the ATF’s rule.

Fox News Digital has reached out to the White House for comment for this story.

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A group of Texas families of transgender youth, as well as doctors who treat them, have filed a lawsuit attempting to block the state’s law banning gender transition care for minors. 

The Texas lawsuit, which was filed Wednesday, argues that SB 14 violates parental rights and discriminates against transgender teenagers. The law was signed by Republican Gov. Greg Abbott last month and is set to take effect Sept. 1.

SB 14 would prohibit transgender minors from accessing hormone therapies, puberty blockers and transition surgeries. Children who have already received this treatment must be weaned off.

The lawsuit argues that the law will have damaging consequences for transgender teenagers unable to receive the gender transition treatment recommended by their parents and physicians.

‘As a father, my primary goal is to ensure that Luna is safe, taken care of, and has everything she needs to thrive,’ one plaintiff, the father of a transgender 12-year-old girl, said in the lawsuit. ‘Because of recent political attacks against transgender Texans, and [the law] SB 14 in particular, my ability to be a great dad for my kid has become much more difficult.’

The lawsuit alleges that many transgender teenagers will ‘face the whiplash of losing their necessary medical treatment and experiencing unwanted and unbearable changes to their body.’

‘I am gravely concerned about my patients’ ability to survive, much less thrive, if SB 14 takes effect,’ plaintiff Richard Ogden Roberts, a doctor, said on behalf of himself and his patients.

Roberts said in the lawsuit he and his colleagues are concerned they will be required to choose between upholding their medical oaths or following the new law.

At least 20 GOP-led states have adopted laws to ban some gender transition care for minors. But half of those laws have not taken effect because they were only recently passed or because enforcement has been put on hold by the courts in Arkansas, Indiana and Kentucky. In June, a judge blocked Tennessee’s ban from taking effect, but an appeals court this month said it can be enforced, at least for now.

Lawsuits have been filed in other states as well in efforts to block their bans on gender transition treatment.

The Associated Press contributed to this report.

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Sen. Ted Cruz, R-Texas, and Marco Rubio, R-Fla., introduced a bill Thursday that would ban federal agencies and employees from using the term ‘Latinx’ on any official document.

The two former presidential candidates introduced the ‘Respect for Hispanic Americans Act,’ matching similar legislation introduced in the House of Representatives. Rep. María Elvira Salazar, R-Fla., introduced the ‘Reject Latinx Act’ prohibiting the same term earlier this Congress.

‘Hispanic Americans overwhelmingly oppose the term ‘Latinx,’ and I want to make sure our government does not bow to woke activists in our federal departments or agencies by insisting on ridiculous terminology like this,’ Cruz said in a press release. ‘It has no place in official government communication, and I’m proud to work with Sen. Rubio to keep it out.’

Rubio added: ‘Hispanic Americans don’t need fabricated woke terminology imposed on us. The term ‘Latinx’ has no place in our federal agency’s official communication as it’s a degradation tossed around by progressive elites.’

Arkansas Gov. Sarah Huckabee Sanders, who signed legislation into law banning the word ‘Latinx’ by state government officials, applauded the move on Twitter.

‘This is language used on college campuses and by woke corporations – not the Hispanic community,’ the Republican governor tweeted.

When Salazar introduced her legislation in April, she said the Biden administration was ‘waging a woke crusade on Latino identity and the Spanish language’ by pushing the use of ‘Latinx.’

‘We cannot allow the Biden Administration to use White House communications to attack our language and impose progressive ideology on our people,’ the lawmaker added.

The Biden administration has pushed the term ‘Latinx’ as an effort to be more inclusive but the term has not been widely adopted by the Latin American community.

In a press release, her office said the term was a ‘woke invention of the neo-Marxist left’ and said it ‘should never be used to refer to someone of Latin American or Hispanic ancestry.’

‘Latinx is overwhelmingly rejected by the Hispanic population in the United States. Many find the term extremely offensive and patronizing. Polls conducted in the last four years all show us that most Latinos have never even heard of ‘Latinx,’ let alone use it,’ the statement continued.

Her legislation was co-sponsored by Reps. Byron Donalds, R-Fla., Alex Mooney, R-WV, Jeff Van Drew, R-NJ, Tony Gonzales, R-Texas, Carlos Giménez, R-Fla., and Burgess Owens, R-Utah.

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Special Presidential Envoy for Climate John Kerry was heavily criticized after he testified during a congressional hearing that he has never owned a private jet.

During the hearing – hosted Thursday by the House Foreign Affairs Committee – Rep. Cory Mills, R-Fla., confronted Kerry about his past private jet use in light of the top administration official’s efforts to fight climate change. Kerry said his purported use of a private jet is ‘one of the most outrageously persistent lies that I hear,’ adding that he doesn’t own a jet and has never ‘personally’ owned a jet.

‘Bottom line is that the climate czar is showing a climate hypocrisy when him and his family left a 325 metric ton carbon footprint from their private jet,’ Mills told Fox News Digital after the hearing. ‘Meanwhile, Kerry expects the average American to be carbon-neutral and to buy things like unreliable EVs they can’t afford.’

‘Once again, it’s the Democrats’ standard of hypocrisy to tell Americans how to live their lives while they do the opposite,’ Mills continued.

According to flight tracking data obtained by Fox News Digital in July 2022, a Gulfstream GIV-SP jet owned by Kerry’s family made a total of 48 trips that lasted more than 60 hours and emitted an estimated 715,886 pounds, or 325 metric tons, of carbon over the course of the Biden administration’s first 18 months.

The plane was registered to Flying Squirrel LLC, a charter company owned by Kerry’s wife, Teresa Heinz-Kerry, and in which Kerry reported owning a more than $1 million stake on past financial disclosures.

However, one month after the Fox News Digital report that highlighted the jet’s extensive carbon footprint, and after lawmakers blasted Kerry for apparent hypocrisy, the Gulfstream jet was sold to an energy-focused hedge fund in New York City. Whitney Smith, a State Department spokesperson, confirmed the sale in a statement this year and said Kerry travels commercially in his current role.

‘Whether it was his jet or his wife’s jet is missing the forest through the trees. John Kerry is an unelected bureaucrat who’s making decisions that have major impacts on the lives of Americans, the overwhelming majority of whom are going to be more worried about the cost of gas to drive their cars to work, not the cost of fuel to fly a jet to King Charles’ coronation,’ Rep. Brian Mast, R-Fla., told Fox News Digital.

‘He needs to understand that,’ added Mast, who chairs the Foreign Affairs Subcommittee on Oversight and Accountability.

In addition, later in the hearing Thursday, Rep. Mike Waltz, R-Fla., confronted Kerry about his comments that he has never personally owned a private jet. Waltz pointed to the Fox News Digital report that shows Kerry’s family had sold the jet after receiving criticism.

‘Here’s the issue,’ Waltz told Kerry. ‘This isn’t some kind of partisan gotcha. When we are asking Americans to make serious sacrifices, as we transition, for the common good and your family and/or yourself are flying around on private jets, that smacks of hypocrisy. It actually hurts your cause.’

‘John Kerry is preaching climate change while he & his family fly on private jets,’ Waltz added in a tweet later in the day. ‘That smacks of hypocrisy as he’s asking everyday Americans to make sacrifices.’

And Rep. Andy Biggs, R-Ariz., also criticized Kerry.

‘He doesn’t own one but he sure does use one!’ Biggs tweeted.

Kerry’s office didn’t respond to a request for comment.

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In this week’s episode of Sector Spotlight, I discussed the rotation out of defensive sectors into more offensive sectors. The ongoing rotation, I should say, as it is a process that has been underway for a while already.

This rotation is sending a pretty clear risk-on message.

Keep On Checking

However, it is always good to double-check any assessment and see if we can find confirmations or reasons why the assumption might be in danger.

One of the ratios that can serve in such a capacity is the relationship between high beta and low vol stocks. Invesco’s High Beta (SPHB) and Low Vol (SPLV) ETFs are perfectly suitable to monitor that relationship.

The Relative Rotation Graph below shows the rotation of these two ETFs against SPY as the benchmark.

It is interesting to see how both tails are on the left-hand side of the graph. A few facts cause this:

Both ETFs cover only 100 stocks each, while SPY holds all 500 names in the S&P 500 index. As a result, this RRG shows a so-called limited open universe.SPHB and SPLV are equal-weight ETFs. At their rebalancing dates, SPHB selects the 100 stocks inside the S&P 500 index with the highest BETA values over the last 12 months. SPLV selects the 100 stocks inside the S&P 500 index with the lowest realized Volatility over the last 12 months.

It shows the impact of the comparison with the cap-weighted SPY.

A better way to show this relationship on a Relative Rotation Graph, therefore, is to use RSP, the equal-weight S&P 500 index, as the benchmark.

This visualization paints a much clearer picture of the strength of High Beta over Low Vol, and the rotation confirms the Risk-ON conclusion based on the current sector rotation.

Daily

The daily RRG for this combination of ETFs fully confirms the strength of High Beta over Low Vol. The tails are completing a rotation on the same side of the graph, signaling that a strong relative up-/downtrend is underway.

With SPHB just about to re-enter the leading quadrant and SPLV returning into lagging, after a short rotation through improving, a new leg higher in the rotation seems to be starting.

Monthly

The third and final confirmation comes from the same relationship on a monthly RRG. Here we see a big rotation that has been in favor of Low Vol for quite some time, but the tails have recently rotated into RRG-Headings that favor SPHB.

With the tail for SPHB inside the improving quadrant at a strong RRG-Heading and SPLV moving into weakening at a negative Heading, the tide also seems to be turning on the longer monthly time frame. In essence, it looks like things are just starting here.

Price Is The Bottom Line

As always, price is the bottom line in any potential trade.

The chart of SPLV shows how it is trading in a sideways pattern that is moving into a triangle consolidation. With the general market moving higher, that is resulting in a falling relative strength line which in its turn is causing the RRG-Lines to sink below 100 and push SPLV into the lagging quadrant. This is on the weekly time frame.

The chart for SPHB looks significantly different. It is breaking above its previous high THIS WEEK, so the break is very fresh.

The raw RS-Line recently broke above a down-sloping resistance line that ran over the highs since early 2021, and the JdK RS-Ratio line bottomed out above 100 and is now on the rise again.

Conclusion

All in all, the RRG on three different time frames, in combination with the price charts and their relatives, this metric is underscoring the risk-ON perception fed by the current sector rotation.

#StayAlert –Julius