March Strategy Session: 3 Key Takeaways

March 7, 2024

From the Desk of Steve Strazza @Sstrazza

We held our March Monthly Strategy Session Monday night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month.

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

1. Relentless Strength from Semis

The semiconductor industry serves as an important indicator of the health of the global economy and the broader equities market.

Essentially, as semis move, so does the market.

Below we have the VanEck Semiconductor ETF $SMH reaching new all-time highs:

This economically sensitive group is cruising to higher highs month in and month out, which is typical behavior in an environment where investors are embracing risk. We can say the same for other risk-on groups such as homebuilders and broker-dealers.

Seeing these offensive areas of the market continuing to lead is a great indication that the overall equity market is in good shape.

2. No New Lows

Despite the growing list of bearish divergences in recent weeks, we haven't seen any confirmation from price.

The chart below shows the lack of new lows at the individual stock level for the NYSE Composite:

The percentage of new lows has been moving lower all year. As seen by the 10-day, 1-month, and 3-month lows listings above, not only has there been no significant expansion, these numbers are steadily falling.

Mathematically, it is impossible to have any kind of correction without an expansion in the number of stocks declining.

Bears are lurking; however, until we see a surge in these new low indicators, we won’t be anticipating any real selling pressure for the stock market.

3. Japan’s Monster Base

Looking outside the US, things are looking up for stock market indexes around the world.

Whether we look to Europe, Asia, or Latin America, bulls remain in control as participation gradually expands to more and more countries.

The chart below shows Japan's Nikkei 225 closing at new all-time highs:

After three decades of no progress, price is pressing against the old highs from all the way back in 1989.

We don't know how long it will take the Nikkei to break through this resistance level, but we want to be patient after such an explosive rally from the Q4 lows.

Japan is not the only country setting new highs. The list of global indexes registering new highs continues to grow, suggesting the international equity landscape remains solid, especially over longer timeframes.

Those are some of the main takeaways from this month’s strategy session.

Thanks for reading, and please let us know if you have any questions!

Allstarcharts Team