What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
Key Takeaway: Index-level strength lacks support beneath the surface. Economic surprise index dips below zero. The earnings revision trend is higher though the pace of ascent is slowing.
Real Estate moved into the top spot in our rankings. It was one of four large-cap sectors to make new 52-week highs last week (the others were Consumer Discretionary, Health Care & Technology). No small-cap or mid-cap sectors made even 13-week highs.
Financials have been short-term & mid-term laggards, with deteriorating conditions in Banks across market cap levels weighing on the sector.
JC put a post up today taking a look at the Semiconductor sector. As a group, the sector is looking poised for a breakout and he goes into some of the even better looking charts for individual names that make up the sector index. Give it a read.
His favorite idea from the group is one that I can get behind, especially in light of the price action over the past two days. It feels like now is the time to get involved.
Check out this week’s Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.
Let’s jump right into it with some of the major takeaways from this week’s report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
Macro Universe:
Another flat week for our macro universe as only 51% of our list closed higher with a median return of 0.03%.
The Volatility Index $VIX was this week’s big winner with a 7.37% gain.
Lumber continues to decline and was this week’s biggest loser dropping -7.16%.
Dow Jones Industrials $DJI, Nasdaq Composite $COMPX, and the Russell 3000 $IWV all printed bullish reversals this week.
Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Global Yields Threaten European Equities
Last week we discussed the underperformance of European banks and the potential implications in the near term for risk-taking behavior.
This week, these suspicions were confirmed when price fell back below a key level, confirming a failed breakout. Similarly, the MSCI United Kingdom ETF, one of the most important economies within Europe, was unable to break above a significant resistance level around 34. Now, both are trapped below overhead supply.
If European financials and UK stocks are trapped below their pre-covid highs, it’s consistent with an environment where markets remain messier for longer and risk assets are vulnerable.
Technical analysts often say, "From compression comes expansion."
In other words, as markets become more coiled, buyers or sellers are ultimately forced to front up. This period of shrinking volatility is often met with violent unwinds - in either direction.
So when we see these periods of notable reductions in volatility, pay attention because the resolution often sets the tone for weeks and months to come.
Just take a look at how tight the Bollinger Bands have become in Bitcoin:
Through this measure, volatility is at its lowest point since October last year...
The number one question I have gotten from financial advisors over the course of two-plus decades in this business is “What should I do now?” The answer can sometimes be “nothing”, but it cannot always be “nothing”. Dynamic portfolio management is about finding the right balance between following existing trends and adjusting as necessary to new information. To do this we need to have a good grasp of time frames. Every investor has a timeframe. Every system has a timeframe. Finding harmony between the two helps provide the appropriate balance between action and inaction.
We can think about this in terms of navigation and one of my favorite investing metaphors: sailing. We wouldn’t want to go on a journey with a captain who fiddles with the rigging so much that he cannot hold the wind. We also wouldn’t want to go sailing with one who doesn’t even try to catch the wind in the first place. We want to go sailing with a captain who observes where the wind is actually blowing and positions the boat accordingly. Even once the wind fills the sails and there is...
Technical Analysis is an art. It's not an exact science.
Sure, we use a lot of computers and math as inputs to help piece together the overall puzzle. But it's the interpretation of all that data that represents the art form.
That's how I see it anyway.
And so we always like argue both sides and see which one has the highest probability of occurring.
This week we're looking for a long setup in the Industrial Manufacturing sector. We shared a few ideas in our recently concluded Monthly strategy call as well. But here's another name that's looking good!
We retired our "Five Bull Market Barometers" in mid-July last year to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Overhead supply is a theme we're seeing all over these days. And this isn't just true for the stock market, but it's also dominating the commodity landscape.
Crude Oil reached our objective of 76 and turned lower. Copper remains stuck below its former 2011 highs. And Gold has been an absolute mess since peaking last August.
Even the few commodities that have recently broken above resistance zones -- such as Gasoline and Heating Oil -- have yet to follow through and confirm their new highs in any meaningful way.
Remember, commodities have enjoyed some explosive moves over the past year. Now, many are at logical levels to pause and digest recent gains. This is healthy stuff. Normal market behavior.