Key Takeaway: Optimism has been unwound, but pessimism remains scarce. We have yet to see a level of fear associated with a complete unwind in sentiment. Still, risks loom overhead with earnings season heating up and the prospect of disappointing news on the horizon. The tailwinds that have accompanied the market for the past 15-months have dissipated. Analysts no longer revise expectations higher, and breadth is weak with more new lows than new highs across the NYSE and Nasdaq combined. Caution could quickly turn into nervousness and fear without a supportive backdrop in the event less than stellar news ushers in price volatility. It’s important to remember that sentiment resets slowly then all at once. We’ve been through the slow part. Now it’s time to see if the market can withstand a potential bout of disappointment.
Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for five to nine years.
We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money.” Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
What's the one thing that's on everyone's mind today? What has caught your attention today? Or rather, what has demanded your attention today?
The Tata Group of course! Such a move hasn't come along in this group in the longest time. A post dedicated to this group is definitely the need of the hour.
The Tata Group is synonymous with Trust, Integrity, and Loyalty. There is a certain feel-good factor added to the group based on the people at the helm and their activities. While there is a place for everything, once you look at price action, nothing else matters.
That's the beauty of Technical Analysis I guess. It encompasses all possible pieces of information and presents to you a price level that reflects everything. Quite powerful, when you really think about it.
So here we are today, taking a look at a reputable conglomerate that has been making money for investors for years together!
Since there are so many constituents in this group, I don't think it qualifies to be a Solar System. I feel it's a whole Universe by itself.
So what do we like in this universe at the moment?
We debuted a new scan recently which goes by the name- All Star Momentum.
All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.
While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.
Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.
Crude oil is at its highest level since 2014 after it took out resistance around 76.
Energy stocks just ripped off of support and are back above a key level of resistance, trading at highs not seen since early 2020.
Economically sensitive commodities and cyclical stocks, in general, remain very well bid.
Meanwhile, the mainstream media is hung up on narratives surrounding stagflation and the possibility of a global recession. But we’re just not seeing this at all when we look at price.
Risk assets are performing as well as they have all year. And, when we look outside the US, while there’s definitely been selling pressure around the world, the areas that stick out all seem to have something in common.
The energy-dependent countries are showing leadership.
This supports the recent price action from energy futures and stocks, many of which have been ripping to fresh highs.
In today’s post, we'll take a look at some international equities we can use to express a bullish thesis on higher oil prices -- and higher prices for risk assets more broadly.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
All eyes have been on the US dollar as it presses to new 52-week highs.
But its recent rally hasn’t been accompanied by the usual risk-off behavior we’d expect. Actually, it’s been quite the opposite.
Bonds have been rolling over, commodities and cyclical stocks continue to march higher, and the yen can’t catch a bid.
To us, the evidence suggests the USD is momentarily decoupling from its classic intermarket relationships as it grinds higher in the face of all this.
If the US dollar is out of sync with the action in other asset classes, where can we look within the currencies market for a clear perspective of investors’ attitudes toward risk?
That’s right... the yen!
Let’s look at a couple of charts highlighting the Japanese yen’s weakness and discuss what it means for the current market environment.
First up is the classic risk-appetite barometer, the AUD/JPY cross:
Analysts and economists no longer chasing reality higher
Downward earnings revisions coming with stocks priced for perfection
Persistent inflation and higher bond yields would be a new experience for many investors
The past year has been one of widespread earnings surprises and large upward revisions. Whether those trends can remain intact as Q3 earnings season gets underway is one of the more important questions the market has to wrestle with right now. Expectations are elevated going into the quarter, but a number of the factors that fueled the earnings strength of the past year are starting to ebb. I have my suspicions that Q3 earnings season will be a repeat of the recent past.
Over the last few months, we've focused on names trading above their spring highs.
Along with this simple message, we've included this chart featuring four prominent names right at their highs from earlier in the year:
We're putting so much effort into this setup for two reasons:
All-time highs are achieved in the strongest of assets.
Buying new highs allows us to define our risk.
First, bases take time to build.
Bases of this magnitude are formed by accumulation from people with a lot of money that needs to be put to work. Institutions -- or, in the case of crypto, whales -- need liquidity to enter long-term spot positions. They don't have the luxuries of more nimble traders who are able to enter and exit at will and start long-term positions when momentum heats up on a breakout.
And now it's the opposite. Sentiment is a tailwind for stocks.
Take a look at the sentiment from Financial Advisors and Individual investors. Just a few months back, we saw the most amount of bulls since January 2018, just before stocks all over the world plummeted.
All it took was half the nasdaq stocks dropping 20% for sentiment to mean revert. Take a look at this chart showing that we're down to levels where bulls historically start showing up, and that's usually because of an increase in stock prices:
