From the desk of Steve Strazza 

Don't miss this weeks Momentum Report; our weekly summation of all the major indexes at a Macro, International, Sector and Industry Group level. As a reminder, we analyze this shorter-term data within the context of the structural trends at play.

Over the past few days, the narration around Bonds has really caught on. With bond yields across the globe recovering sharply from lows, there are a lot of questions about the current stock market rally, the impact of bonds on the bull-run, whether we should prepare for a sell-off etc.

Let's try and address some concerns through this post where we talk about the impact of bonds and the US dollar on the ongoing stock market rally.

Let's assume we know nothing about the correlations in the market and are basing our view on the simple activity of observing the historical price action and its subsequent impact.

Here we have India's 10-year Government Bond. When we look at the extremes of the movement, which comprises of the high and low clocked in the 2008 crash, the range lies between 9.30-5.25. Since then for 12 years, the range hasn't been breached and if this was any other chart with the name stricken out, one would say it's going sideways.

In the chart below, we have highlighted three instances where the bond yield has bottomed out and rallied. This has happened in 2009 and 2017 in the past. Can we expect the same in 2021?

Let's look at...

From the desk of Steve Strazza @Sstrazza

We’ve been vocal about the strong internals supporting the rally in US Equities.

We've pounded the table about one historic breadth reading after the next as they’ve continued to pop up in a variety of the major indexes and sectors since early last summer.

This seemingly constant influx of extreme readings is not something we see very often... if ever.

For example, the NYSE and Nasdaq recently registered the most new highs in history on a combined basis.

The bottom line is breadth has been overwhelmingly bullish and is one of the main reasons we're in the camp that this is likely the early innings of a new cyclical bull market.

From the desk of Willie Delwiche.

There are plenty of ways to take apart and dissect the move in the bond market that accelerated over the past week. From an investment perspective, if the 11% YTD decline in TLT holds, Q1 statements are going to be a jolt for investors who were led to believe that bonds are a portfolio stabilizer and that you can't lose money in Treasuries. From a market perspective, bonds are putting pressure on the Fed. It’s not yet showing up in the CPI, but Fed officials claiming not to see any inflation pressure strain credibility. It's not the rise in yields at the long-end of the curve that will catch the Fed’s eye, but the move higher in the belly of the curve. The short-end remains anchored by Fed actions, but this week saw 3-year, 5-year, and 7-year yields spike. The 5-year yield is approaching resistance at early 2020 levels, while relative to the 2-year yield (which is responsive to Fed policy) the 5-year yield is at its highest level since 2017. For all the talk of central bank omnipotence and bazookas, the bond market > Fed balance sheet. The Fed may need to adjust its approach.

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Whenever I want to talk about bonds, I always know just who to call. Larry McDonald is a former bond trader at Lehman Brothers and author of the book, Colossal Failure of Common Sense. I highly encourage you to give it a read, especially if you're looking for some perspective on what really happened back in 2007-2008.

It's no coincidence that I reached out to him to come on the podcast. Larry and I had a very timely conversation in February of last year. So with the bond market recently losing 5-6 Trillion dollars in such a short period of time, who better to talk to than by favorite bond trader.

This was fun. We talked about the current move in rates and how that's impacting stocks and bond markets around the world. If you're looking for color on Credit Spreads and Yield curves, this is the episode for you.

What's better than a good conversation about bonds? 

Here are the 3 most defensive assets I can think of, where money flows the fastest when it's scared and looking for a safe home.

It's hard to make the argument that a flight to safety is what's happening if they're all making new lows right? 

Whether it's shopping or trading, sometimes you have to go big.

And there's a retail name that is heavily shorted which is showing signs of getting ready for a possibly big short squeeze.

From the desk of Steve Strazza.

Our Top 10 report was just published; our weekly report highlighting the best 10 ideas and respective charts we are seeing across the markets this week.

1. Weakening Internals In The World’s Top Index

We’ve been vocal about the strong internals supporting US Equity markets and have pounded the table on one historic breadth reading after the next as they’ve continued to pop up in a variety of the major indexes and sectors since last summer. Surprisingly enough, one of the indexes that did NOT experience bullish initiation thrusts was the Nasdaq 100. This is likely because of the fact the bar was already set so high for this index due to its strong performance in years past. Regardless of the reason, unlike indexes that did experience thrusts, we’re paying attention to divergences in many of the Nasdaq’s breadth indicators. There’s been a notable deterioration in participation beneath the surface in what’s been the world’s strongest stock index for years. With the index finally showing some weakness and appearing to cede its leadership role to some of the more...

Here we go with our next round of the Top-Down Take post. At All Star Charts, we like to keep things simple and look at the bigger picture. We let the charts speak to us and then decide what to do. Always remember, the Trend is our Friend.

Today we’re taking a look at a sector that has been an outperformer in the recent past despite broader market correction. Nifty Metal is now moving from strength to strength as more constituents break out of long-term bases.

Some of us are old enough to remember a time when Value stocks were the place to be. The kids these days look at me like I'm nuts when I talk to them about banks and energy stocks!

There's a whole world of companies that used to do great. In fact, early in my career these were the names to be in: BTU, WLT, LEH, MER, BSC..... Good times!

Tech and all that other stuff came much later and has been the big driver in the U.S. over the past decade. But the rest of the world has suffered, without that exposure to Tech and Growth, and instead loaded with banks and natural resources, the worse places on earth for some time now.

Fast forward to today and we continue to get more and more evidence suggesting that it's changing.

It's no longer US over International and EM. It's been EM and International over US. It used to be Growth over value for so long.

That's just no longer the case:

This is the video recording of the February 25th Town Hall Meeting w/ Willie Delwiche & JC Parets.

02/25/21 2PM ET

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table you...