Moving to my home office began as a temporary situation during the height of COVID uncertainty. But a day at home turned into a week, which turned into a month. You know the rest.
I was fortunate that I had an office of sorts set up in my basement prior to the pandemic. If ever a basement room could be cozy, this might be the one -- wood plank floor, brick walls, south and east-facing windows that provide some natural light and the opportunity for the dogs to look in on me while they play in the backyard.
Of course, I had to make some changes to my permanent basement headquarters. I've rearranged the room several times to accommodate a growing array of equipment and an always increasing supply of books. I'm on my fifth or sixth iteration of a desk setup as I've moved from sitting on a couch hunched over a laptop to standing at a desktop of salvaged planks and looking at a couple of monitors.
I am thankful for what I have at home, but there definitely are a few things I appreciated about working downtown…
We published a post talking about how Chemicals were outperforming in the current market scenario. Another such group of stocks that have been performing well, is Cements. We published a post dedicated to Cement in December 2020, but it seems like the move has only started! More names are getting added to the 'strong' column so we thought we could revisit this sector again.
Are there any other stocks that have undergone any structural changes? Let's find out.
ACC has been an underperformer in this sector for quite some time now where we've cautiously put this name on the 'watch list'. It seems like the wait might just be over!
The price has finally broken out above the all-time high near 1,870 and looks ready for another leg of the rally. This is a four-year base breakout as the indicator continues to hovers around bullish momentum territory.
We are bullish above the risk management level of 1,870 with a target near 2,470.
Technology & small-caps vulnerable to further rise in yields
Tangible sectors of market showing strength & leadership
One of the biggest stories of the first quarter has been the dramatic rise in bond yields. The Federal Reserve has repeatedly stressed its willingness (even desire) to let the economy run hot. In doing so it has kept the short-end of the yield curve well-anchored. The long-end of the curve, which is impacted by the hopes and fears of bond traders more than pronouncements by the Fed, has seen yields move higher. The yield on the benchmark 10-year T-Note came into the first quarter below 1.0% and has risen above 1.7% as the quarter winds down. The 10-year T-Note yield is finishing the quarter at its highest level since January 2020. As important as the absolute level of bond yields is the turn higher in the longer-term trend and the pace at which that trend is rising.
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.
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
While the same themes we've laid out in previous reports continue to hold strong, we have seen some recent deterioration, particularly in the large-cap sectors and indexes.
Despite an increase in bearish developments, the overall weight of the evidence is still firmly in the bull camp, and we remain aggressive buyers of stocks and risk assets, particularly over any longer-term timeframe.
These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.
This month’s Video Conference Call will be held on Thursday April 1st @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.
Key takeaway: The evidence continues to suggest we have recently undergone a healthy unwind in excessive optimism. Investment manager’s equity exposure has dramatically pulled back from extreme readings but remains above levels that signals a shift toward risk aversion risk that can weigh on price. Combining that with budding optimism among individual investors and a supportive, neutral backdrop in sentiment arises. Though global markets lack strength from a tactical perspective, the message remains digestion over deterioration given recent breadth thrusts and that the majority of international markets are in uptrends. For now, the reset in sentiment provides upside potential for both optimism and price.
Sentiment Chart of the Week: Risk Appetite Remains Healthy
One of my favorite things to talk about is Behavioral Finance and Investor Psychology. The whole thing is incredibly fascinating to me. That's why I was super stoked when Dr. Daniel Crosby invited me on his Standard Deviations Podcast.
Usually I'm the one asking him the questions, but this time he flipped the script. This was a lot of fun!
The market has been moving sideways for two months now. But that does not mean that every sector will reflect the same move.
As the story of a market cycle unfolds, various sectors assume importance just like different characters in a play. Currently, the Chemicals segment is in the spotlight so let's see what its constituents are up to!
The Chemicals segment has been showing strength over the past few days with some interesting setups lined up. We included one such setup in our Trade of the Weekpost.
First up, we have Pidilite Industries which is now moving back into positive territory as it inches towards its overhead resistance at 1,800. The price has consolidated in the range of 1700-1820 and looks ready for a breakout as the indicator attempts to move higher. With the overall sector in focus, Pidilite could be dolling up to participate in the next leg of the rally.
We are bullish above the risk management level of 1,820 with a target near 2,030.
In our continued effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."
We write a post every other week where we outline some of our favorite setups from this universe of stocks.
We've already had some great trades come out of this column and couldn't be happier about the early feedback.
Moving forward, we'll be rotating this column with "Under The Hood" each week.
In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.
Then, we simply sort the stocks by their percentage from new highs. Easy done.
