This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.
Today, we're going to discuss an Industrial conglomerate and well-known household name, as well as one of the largest Natural Gas companies in the world.
Not only are these stocks in some of our favorite sectors right now, but both are currently flirting with reclaiming key former highs. They also offer clearly defined risk levels to trade against, in addition to profit profiles skewed heavily in favor of the bulls.
We'd be remiss not to share these setups with you, so let’s dive right in and look at them…
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.
Key takeaway: Evidence of excessive optimism abounds. Recent articles in the Wall Street Journal provide anecdotes for the data: Conservative German savers are increasing their exposure to stocks and investors in the US are crowding into the market, focusing more on chasing returns than managing risks. Cyclical views trend and strategic positioning point to elevated risks but stocks have been buoyed by a favorable news backdrop (positive economic data surprises and upward earnings revisions) and resilient breadth. If these falter and investor appetite for risk fades, those areas of the market where speculative fever has burned the hottest could be the most vulnerable.
Sentiment Report Chart of the Week: Long Equity Camp Crowded
It sure feels like a long time ago now, but it's been less than a decade since the European Union underwent a rather serious sovereign debt crisis.
This set off a roughly two year bear market for International Stocks as well as a rangebound mess for US stocks.
After this bout of volatility, most risk-assets carved out significant lows in 2016 and rallied higher until global risk peaked in 2018. Then it all fell apart again last year.
This brings us to today, where we're now seeing European countries and indexes trade right back up to their 2018 or pre-COVID highs left and right.
While diversified global indexes like MSCI EAFE $EFA and MSCI Europe $VGK recently reclaimed their former highs from 2014, 2018, and are already well above their pre-COVID peaks - they are now approaching a far more important area of overhead resistance at their pre-financial crisis highs.
