As if dealing with Harvey wasn’t enough, Hurricane Irma (his not so distant cousin) has already wreaked havoc along its path through the Caribbean. It now looks to do a lot more damage. Hurricane Jose, Irma’s younger brother, is also lurking.

In fact, Irma is heading right to Florida, targeting President Trumps federally insured Mar a Largo beachfront estate otherwise known as White House South.

Certain Republicans think the storm’s path is the result of divine intervention for Trumps treasonous deal with democrats to raise the debt ceiling for another three months.

Regardless, the impact to the markets has been somewhat predictable and muted. Airlines have been hit hardest while trains and trucking are firm.Hence the IYT (transportation sector) acted well and ended positive for the week. IYT outperformed the SPY over the past few weeks and even moved back to a bullish market phase as well. The updated market logic is sell the forecast and buy the storm.

There are several themes to note. US equities markets have stalled since mid-June and momentum is waning. Our risk gauge is showing weakness as 4 out of our 5 key intermarket relationships are not favoring stocks.

Even with bonds on a tear, US equities have not been able to breakout with conviction. The influx into bonds and gold has been spurred on by Geopolitical tension and tepid US economic growth. Thus, central banks continue to maintain an easy money policy. In fact, depositing money short term in a Eurozone bank will cost you -.4%, which makes owning gold a better play.

Volatility, while still very low on an absolute basis, has popped above both its 50 and 200 day moving averages, another yellow flag. Growth stocks continue to exhibit strength versus value.

However, if Growth (VUG) stocks fail at current levels combined with weakness already showing in value (VTV) stocks (and unlikely to provide new leadership), it’s is a recipe for at least a meaningful short-term correction.

Foreign equities, especially Eurozone stocks continue to outperform US equities by a wide margin. They have yet to show any signs of abating.

Keep in mind that longer term trends are intact for US Equities. Employment data is positive so a recession seems unlikely in the next 6 -12 months, assuming the back to back impact of the storms don’t slow economic growth to the tipping point.

If all that doesn’t clarify things, check out this week’s video where we take a deeper dive into whether we are setting up for a meaningful correction or just working off frothy levels by choppy sideways action.

Video length: 00:09:51