[PLUS] Weekly Momentum Report

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level. By analyzing the short-term data in these reports we can take a more tactical view in order to better understand and gain insight into the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro

• Just about all of the major diversified equity indexes in our macro universe - both US and International, were higher this week. The only exceptions were Small and Micro-Caps, as well as Emerging Markets.
  • Here is the S&P Global 100 $IOO, which just tacked on an additional 3.5% and closed at fresh all-time highs for the third consecutive week... and it did so in about as bullish fashion as possible with a marubozu candlestick. As you can see, this candle opens at the lows and closes at the highs, illustrating the strong and steady hands of buyers throughout the week.

• The average momentum reading (daily RSI-14) is 57 for the entire list and an even more impressive 64 when looking at equity assets only.
  • These are strong readings and nothing like the deterioration we saw prior to last year's bear market.
• As further evidence of the strong momentum from equity markets all over the world, every single index is in a bullish momentum regime except for the High Dividend $HDV factor.
• Outside of the new monthly low for the Commodity Index $CRB, new lows were isolated to defensive assets like Bonds and the Volatility Index.
  • The $VIX - often referred to as the "fear index," made new 52-week lows. The only other fresh 52-week lows came from 10-year Treasuries.
  • As for Commodities, the big question is this: Are these new short-term lows for the $CRB just a bear trap, in which case this counter-trend move soon reverses higher..? Or, did this multi-year base breakout just fail, and that was it for the move in Commodities?

• We should know soon as price has been chopping around a critical level of former resistance at the 2019 and 2020 highs around 188 for almost a month now.
  • We remain in the camp that this is the beginning of a new commodities supercycle, and therefore think it's only a matter of time until buyers regain control. Although if they don't, we'll have to rethink our bullish thesis.

International

• The big takeaway here continues to be the notable rotation into global equity markets as our list has been littered with new highs week in and week out lately.
  • Our international universe has actually had stronger internals than our US universes for several months now.
• This development began as a broadening of participation last year as more and more countries around the globe started breaking out of massive bases, supporting the new highs we had seen from the US.
• It is now turning into something much larger as we've seen sustained outperformance from international stocks relative to their US counterparts for the first time in almost a decade.

• Measured by the x-axis above, notice how all but one of our international ETFs are higher today than they were back in early September (which is when international equities bottomed on a relative basis).
• This bubble chart also does a good job at showcasing the strength from European markets right now as you should notice more and more blue as you move up and to the right.
  • This is also highlighted by the new all-time highs on the momentum report, as the majority were from Europe and included...
    • Ireland, Sweden, Switzerland, and the Netherlands.
• Here's some further evidence of the broad-based strength from world equity markets showing up in other statistics on our report:
  • 85% of our list is in a bullish momentum regime with a median RSI-14 reading of 59.
  • The median ETF is just about 2% from fresh 52-week highs.
• As for new lows, they were more or less non-existent, with just Thailand and Indonesia making fresh monthly and quarterly lows, respectively.