The very bullish Nasdaq 100 (QQQ) continued to chew up both the bears and non-believers with its recently-polished set of FANGS. Meanwhile, retail stocks with a physical presence tanked, with AMZN picking up the slack. The Russell 2000 (IWM)— a broad measure of domestic-based stocks-- continues to languish, up just 2% YTD compared to the QQQ’s (which are up almost 17%!).

The new normal environment includes one or two controversial White House actions and dozens of wacky tweets. This behavior would normally unhinge equity markets, but for now Mr. Market has already taken an insanity plea and received immunity. He seems impervious to anything that happens on Capitol Hill (for now).

Ray Dalio, head of Bridgewater, sees the current situation as a Goldilocks economy (again, for now), but foretells an unraveling unlike any seen before.

Here is the logic: the long-term trend toward Populism suffered a setback with Macron winning in France. It will keep the current global bull market for equities rolling for now, but the long-term trend, driven by the disparity of the “haves” and “have nots” on a global level, lurks— driving a massive meltdown in near future.

Our risk on indicators continue to confirm Dalio’s musing with some caveats. For example, the retail sector (70% of US GDP) continues to get hammered. In addition, the sectors that rallied hard after the election have stalled, such as financials and transportation.

The market internals are weak and not confirming, so a sell-off could transpire at any time.

The move up (while the S&P 500 sits near new highs with a short-term pattern that can be played either way) affords tight stops and asymmetrical risk.

To see this setup and more, check out this week’s video.

Video length: 00:20:09