The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.
The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Commodities have been on a tear, with the Bloomberg Commodity Index recently posting its best week since 1970 and the CRB Index rallying more than 25% year to date.
Despite the broad strength from commodities, Dr. Copper – a key economic barometer – has yet to break out like so many of its peers.
After making a new all-time high last Friday, buyers were unable to sustain the move, and price retreated into its former range.
While it’s great to see so many other contracts trending higher, bulls really need to see copper join the mix. If this is truly a new commodity supercycle, it better break out from this consolidation.
It is that important to the overall asset class.
Let’s break down the various technical scenarios for copper’s recent move and discuss what they mean for the entire space.
First, the move could have been a premature breakout:
The hunt for options premiums to sell continues. And with VIX showing signs that it might want to give up the 30 level for a little bit, we may have the trend of implied volatility mean-reversion beginning to become a wind in our sails.
A quick perusal of the most liquid ETFs options markets that I follow revealed a surprising sector at the top of the list: Utilities. And the recent price action suggests to me we may have seen the $XLU ETF get a bit ahead of itself, and it could be due for a little consolidation.
Our Hall of Famers list is composed of the 150 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that, which you can check out here.
The Hall of Famers is simple.
We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
Stocks attempted to rally this week. Following Tuesday’s abortive attempt to regain the considerable ground lost on Monday, the S&P 500 posted its best daily gain since 2020 on Wednesday (+2.65). The S&P 500 is still down on the week as I write this, but if the right headlines cross the wire this afternoon, anything could happen. That’s the kind of environment we are in. One filled with plenty of day-to-day noise. Stepping back, the S&P 500 attempted to rally off the lows in both January and February as well. Then, lower highs were ultimately followed by lower lows. The consistent theme as the indexes have moved lower off of their early year highs has been weakness beneath the surface. The number of stocks making new lows has been persistently higher than the number of stocks making new highs. When that changes, and we see evidence of meaningful improvement in breadth, we can take a more constructive view of rally attempts. For they deserve skepticism. Let’s make it a mantra (or at least a T-shirt): “No Thrust? No Trust!”
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Sideways has been the theme for most risk assets since they peaked in the first half of last year. Markets have become increasingly messy in the time since.
If we’re talking about US equities, the market is as bifurcated as it’s been in years.
All we mean by this is that depending on what group a stock is in, it could be in a nice uptrend, but it could also be in an ugly downtrend. Stocks and other risk assets are literally moving in opposite directions these days, and doing so with some serious momentum.
At the index level, you can see this split market reflected by trendless ranges.
When we look to our risk-appetite ratios and indicators for information, we’re not getting much as the vast majority are still stuck in the same ranges they’ve been in for the better part of 12-months.
So, risk assets are a mess and most of our risk indicators are also a mess. Makes sense, right?
This isn't a post about nuclear Armageddon or a survival guide for a post-apocalyptic world.
But it is about recognizing when something has ended.
In rare cases, we know when an end is coming and can try to prepare. This was the case with my son's final grade school basketball game. The season-ending tournament was on the calendar months in advance. But even still, there were a few tears when the final buzzer sounded.
In other cases, we might not know in advance that an end is coming, but can quickly recognize that it has arrived. Think about going home from the office for the last time as the COVID crisis was intensifying in Spring 2020. Few knew when they shut their computers down for the day that it would be weeks or months (if ever at all, in my case) until they returned. Though unexpected, that reality became obvious in short-order.
It's the sound of tilted traders getting chopped up.
It's a tale as old as time: people playing the market like it's trending, when it's nothing more than ping-ponging.
Price is in a really well-defined range, and there's no point getting hyped by any moves - up or down - before we actually get confirmation of a real break.
This approach of remaining completely neutral has done a great job of protecting us from the tilt of getting chopped up.
