The rotation nobody's talking about (and why it's dangerous)

Don Kaufman here. 

We're officially buying crap.

I know that sounds harsh, but look at what's actually moving this market.

XLU: Utilities smashing expected moves - when's the last time you got excited about utilities? 

XHB: Home builders with interest rates where they are. 

XLI: industrials hitting the upper edge of the expected move. 

XLB:  materials that nobody's even heard of. 

IYH: Healthcare is exploding to the upside even when everyone thought RFK would kill the sector. 

And technology? XLK is "massively unchanged."

This isn't healthy rotation. 

This is desperation buying. 

The valuations on everything good are completely and totally insane, so now people are paying attention to crap because there's nothing left to buy.

Here's the scary part: the correlation between equal weight S&P and market cap weighted just snapped back to 92%. Last week it was down at 30%.

Everyone's celebrating like this is good news. 

"The correlation came back!"

No, no, no, no. You don't understand. It means technology has completely stalled.

The equal weight had a huge breach of expected move while regular S&P barely gripped the upside. 

When everything's equally weighted, it's crushing the market. When it's cap weighted like normal? Barely moving.

Add in Friday's Christmas Eve volume levels - 625,000 contracts with 10 minutes to close, which is absolutely pathetic…

VIX is dead on the floor, but volatility futures 26 days out are pricing forward VIX at 17.90. 

The future is bright and filled with risk.

Get my full weekend breakdown here

Time to pay attention.

To your success,

Don Kaufman

P.S. My earnings flips strategy is crushing it - Tesla at 176%, Google at 135%, batting 50% overall. The key? Play the volatility expansion, take profits fast, don't get cute. The next batch of setups is coming this week.