Jordan Kotick is one of the key people that early in my career inspired me to be more intermarket oriented. They would ask Jordan about the S&P500 and he would go into a tangent about bonds. They would ask him about Emerging Markets and he’d whip out, what he refers to as, “Chinese Dow Theory”. For over a decade, Jordan was the Managing Director of Macro Strategy at Barclays and then Managing Director of Cross Asset Strategy at RBC Capital Markets. He is the first person to have ever been president of both the CMT Association (then called the MTA), and the Canadian Society of Technical Analysts (CSTA). In this podcast episode we talk about some of the great lessons Jordan learned over the years and what sorts of markets and charts investors should be paying attention to in the current environment. This was a really fun conversation and was great to catch up!
The Week In Review (05-08-2020)
From the desk of Steve Strazza @Sstrazza
For the week ended Friday, May 8, 2020:
Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Many of the relative trends in stocks that have been in place for a long time have come into question recently as they’re showing signs of maturing due in part to the change in leadership we wrote about this week.
In this post, we’ll highlight two structural intermarket themes that have remained robust throughout this tumultuous time for equity markets.
Ichigo Ichie
If you know me by now, you know how much I enjoy all things Japanese. For me, it’s the best cuisine on earth. The architecture in Japan is spectacular. I can’t take the smile off my face whenever I’m there. If you can believe this, I even passed the Japanese Sake Advisor Exam earlier this year.
There’s a blog post I’ve been working on for a while I titled, “Investing Like a Sumo Wrestler”. But that’s a conversation for another day.
This week I was watching the new documentary, “The Delicacy”, about sea urchins and the divers who harvest them. Uni, which is what the Japanese call the edible part inside the sea urchins, is one of my favorite snacks in the world. You can get good ones from Hokkaido, Santa Barbara and off the coast of South America.
The documentary was awesome, even if you don’t like to eat Uni, like my wife. She also loves visiting Japan, but she’ll tell you she prefers Italy or Greece. I’m torn.
Anyway, watching this while having a glass of Junmai Daigingo sake, they brought up the concept of Ichigo Ichie. This is a philosophy that I learned about while visiting Kyoto a few years ago and unfortunately never had a chance to write about it.
Ichigo Ichie is a cultural concept of treasuring unrepeatable moments. It’s most often used to remind people to cherish any gathering as a once-in-a-lifetime experience. Even if that moment is with the same group of people in the same place, each time will be different than the last. So if we let it slip away without enjoying it, the moment will be lost forever. [Read more…]
Retail Stocks & Unemployment Rate Both Break Out!
The headline you’ll hear is that unemployment rates are soaring to unprecedented levels. What I always like to point out is that stocks crashed months ago, collectively factoring in just that. Stocks are a discounting mechanism. It’s more obvious today than ever, and I think this is a nice reminder. [Read more…]
[Options Premium] Let’s Do it Again
For the past week or so, it’s been a feeling to me that markets are setting up for some sideways chop with any directional bias being to the downside from here.
Meanwhile, options volatilities still remain elevated across the board (though well off the March highs) reflecting a lingering fear among market participants of another shoe to drop as the Coronavirus scare continues to effect human health and the global economy.
Against this backdrop, I’m looking for some delta-neutral credit spread strategies to employ. When doing so, I like to scan the most liquid ETFs and look for the ones exhibiting the highest premiums. [Read more…]
The Weakest Region In The World
From the desk of Steve Strazza @Sstrazza
There aren’t too many charts in the Equity Markets breaking out of decade-long bases on an absolute basis right now…
This week’s Mystery Chart was though, and the vast majority of you were buying it against former resistance turned support. We agree with that approach and would be doing the same here.
Thanks as always to all those who participated, but there’s just one catch…
The chart was inverted! This means most of you were actually selling the breakdown in the Latin America 40 ETF (ILF).
Whenever In Doubt, Zoom Out – Gold & Silver
When we talk about “Precious Metals”, it can mean a lot of things. You’ve got the metals like Gold and Silver, which are behave very differently at times, and you have the stocks with all sorts of market capitalizations. There are a lot of ways to describe the precious metals space, so let’s get into a little bit of that today.
Here is a chart of what this group looks like this year. Notice the outperformance from the Gold Miners Index Fund, almost twice the performance of the metal itself. The little guys and silver in general didn’t perform nearly as well:
Click on Charts to Zoom In [Read more…]
[Table Of The Week] A Look At The New Leadership
From the desk of Steve Strazza @Sstrazza
There has been a lot of talk about the potential implications on the broader market if Mega-Cap Growth and Technology stocks were to lose their leadership. Since they have been responsible for driving much of the gains in the major averages for years now… we can only ask ourselves, who might pick up the slack if and when this happens?
In this post, we’re going to analyze the top-performing areas today and compare them to their strength before the market crashed in February and March.
We’ll also look at the leaders from back then and see how they’re holding up today.
This will give us an idea of whether we really are undergoing a change in leadership or not, and if so, where the new areas of strength are.
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