This is the video recording of the May 13th Town Hall Meeting w/ Willie Delwiche & JC Parets
05/13/21 2PM ET [Read more…]
Expert technical analysis of financial markets by JC Parets
by Peter
This is the video recording of the May 13th Town Hall Meeting w/ Willie Delwiche & JC Parets
05/13/21 2PM ET [Read more…]
by Peter
From the desk of Willie Delwiche.
JC and I were talking about the market last week in one of our town hall meetings.
“It’s a market of stocks,” he said, offering up the old Wall Street adage about looking at market health by looking beneath the surface.
I don’t dispute the wisdom embedded in that comment. It’s an adage for a reason.
But my response to JC was, “No, it’s a market of sectors.”
Let me explain…
by Peter
From the desk of Willie Delwiche.
Key Takeaways:
The headlines are filled with stories of higher prices for pretty much everything (have you tried to buy a used car recently) and our charts show widespread strength in commodities (beyond just the headline grabbing moves in lumber and copper. Still, this morning’s CPI report managed to surprise many. The headline CPI was up 0.8% in April, versus an expected increase of 0.2%, and the core CPI was up 0.9% in the month, versus an expected increase of 0.3%. That was the largest monthly increase in the core CPI since 1982. The core CPI is now up 3.0% over the past year, the largest such change since 1996. While this may be due in part to various base effects (given where prices were a year ago) and bottlenecks (supply chain disruptions), the core CPI has moved decisively above the median CPI. This suggests a distribution of price changes that is skewed toward inflation rather than dis-inflation and may indicate that the moderating inflation environment of the past 30 years may be coming to an end.
by Peter
From the desk of Willie Delwiche.
Key takeaway: A peak within the NASDAQ (or the Technology sector) shows that pockets of speculative excesses are being unwound. There has been enough strength in the market elsewhere, as well as a still favorable earnings and economic data backdrop, to keep investors generally optimistic. In March, market volatility allowed optimism to retreat from excessive levels but not completely unwind. We may be seeing early indications that the current bout of volatility will have a more substantial impact on investor psychology. If so, the price reaction will likely not be as benign as was seen two months ago.
Sentiment Report Chart of the Week: Unwinding Speculative Fervor
The Nasdaq has been the leader off the March 2020 lows during the speculative beta chase that ensued. However, excessive optimism has come off a full boil and it shows in pockets of breadth deterioration seen in the former leader. While more than 40% of the stocks in the NASDAQ Composite have seen drawdowns of 30% or more, less than half that number (18%) are even at new 63-day lows.
by Peter
From the desk of Willie Delwiche.
Key Takeaway: Stocks looking at a year two market. Stocks looking at a year of two markets. Economic surprises remain a tailwind for now but data struggling to keep up with expectations.
Cyclical value sectors remain in their leadership positions. New highs last week in Materials, Industrials & Financials helped pace the market, and rally participation with these sectors remains robust. The rotation out of leadership from the growth sectors can make it a challenging environment for passive investors. Technology, Discretionary, and Communication Services make up 50% of the market cap of the S&P 500, and the index could struggle to see sustained strength if these areas are not participating. Defensive areas like Utilities & Consumer Staples are buried at the bottom of the rankings.
by Peter
From the desk of Willie Delwiche.
The headlines this week focused on the, for lack of better word, carnage in some of the most speculative areas of the stock market. While late week rally attempts have taken some of the sting out of those declines, many of the hottest areas from 2020 are seeing more breakdowns than breakouts. While maybe not as exciting as SPAC’s and Innovative Tech companies, I’m paying attention to what’s going on in the Financials sector. The sector made new highs this week (as did Materials and Industrials), and its new high list expanded as well. The 75% of stocks in the sector making new 52-week highs is the highest in the decade’s worth of data we have available. Maybe I’m old-school, but leadership and broad support from Financials is not usually evidence of an overall market that is on the cusp of trouble.
by Peter
This is the video recording of the May 6th Town Hall Meeting w/ Willie Delwiche & JC Parets
05/06/21 2PM ET [Read more…]
by Peter
This is the video recording of the May Options Conference Call with Sean McLaughlin & JC Parets.