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...

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 Monday March 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.

Here are the details for Monday evening:

I've been incredibly fortunate to travel and learn from other cultures over the years. The tools and strategies I've picked up during my experiences in Singapore, Hong Kong, London, Tokyo, Taipei, Dublin and many other cities around the world have really helped shape the way I approach markets.

After so many conversations with smart folks, from all kinds of different backgrounds, for so many years, it makes it almost impossible not to learn a few tricks along the way.

Today I want to share on of my favorite gauges of risk appetite:

This is the one we want to watch, more specifically the NIFTY Smallcap 100 Index relative to the NIFTY 50 index. The latter represents 50 of the largest Indian companies on the National Stock Exchange.

It's the ratio between the two that we want to focus on:

From the desk of Willie Delwiche.

Key takeaways:

• Previous leaders have been overwhelmed by strength elsewhere
• Market following those who are stepping into the fray
• Market dynamics working against passive investors

Have the generals lost their way? Maybe not in an absolute sense, but definitely relative to where the action on the battlefield is taking place. More importantly, does this doom the army to defeat? 

Market discussions of generals and their armies usually focus on whether the army is retreating as the generals advance. A very different situation is playing out currently. The mega-cap leaders that have been pacing the market for years (a trend that intensified this time last year as the shock of COVID overwhelmed the world) have been bogged down even as other areas of the market have heated up. So far, at least, it has been a case of marching in place more than actually sustaining losses. Upward pressure on bond yields and the emergence of better opportunities elsewhere could...

We've been talking about Commodities and a possible upcoming supercycle in this asset class.

The reason we're inclined to this view is that we're seeing signs of this on several different charts across the globe. Now when that happens, we've got to sit up and notice.

Remember when the unthinkable happened and Crude Oil traded below zero? Entertaining as it may be (to some) such extreme readings on the chart tend to act as signals for the future.

Take a look at the chart below. It is the S&P500 relative to the inverted ratio of the CRB Index (Cap-Weighted Commodity Index). The long-term chart below suggests that the extreme negative readings that we saw in Crude Oil seem to have probably sealed the top in this ratio. Can Commodities begin their outperformance going forward? It's quite likely. The individual constituents certainly look like they're ready for a good move!

Click on chart to enlarge view.

It is important to note here that we're looking at commodities like base metals...

Our album is #1!

Oh wait, not that kind of platinum. We're talking about the metal. The guys on the ASC team are starting to get pretty geeked out about the metals space --- with good reason. Prices. Are. Breaking. Out. Sometimes it's just this simple.

These are the registration details for our Weekly Town Hall.

From the desk of Steve Strazza @sstrazza

Check out our latest Mystery Chart!

What we do here is take a chart that's captured our attention and remove the x/y-axes as well as any other other labels that'd help identify it. This chart can be any security of any asset of any timeframe - on absolute or relative basis.

Maybe it's a ratio, a custom index, or maybe price is inverted. It could be all three!

The point is, when we aren't able to recognize what's in front of us, we put aside any biases we may have and scrutinize it objectively.

While you can try to guess the chart, the point is to make a decision...

So let us know what it is… Buy, Sell, or Do Nothing?

From the desk of Willie Delwiche.

Key takeaway: Optimism remains elevated when looking at investor positioning (equity ETFs have seen a quarter trillion dollars of inflows since the end of Q3) and demand for call options (up 60%+ over the past year). But sentiment concerns become more acute (and stocks more vulnerable) when optimism shows evidence of meaningfully unwinding. This week’s featured sentiment chart (ratio between HYG and LQD) suggests that rather than pushing back from the buffet and beginning to tighten their belts, investors continue to have a robust risk appetite. That doesn’t preclude an uptick in market volatility, but it reduces the risk of sustained weakness at this point.

Sentiment Chart of the Week: HYG/LQD Ratio and S&P 500

Stretched optimism becomes more problematic once risk appetites reverse & the HYG/LQD ratio suggests this is not yet the case. In fact, this ratio is more consistent with the healthy commencement of a new uptrend.

It's not about a virus or any economic reports. It's about Credit.

We've said it before and we'll say it again.

Look at last year, for example. By the time the S&P500 finally put in its high in February, everything else had already been falling apart. Small-caps, Mid-caps, Micro-caps, Financials, Transportation, Emerging Markets, New Highs list, Advance-Decline Line, the Value Line Index and S&Ps relative to its alternatives had all been pointing to stocks falling.

There was more data early last year suggesting to be completely out of stocks, and in bonds instead, than before any other crash in stock market history. We discussed this last week.

But even if you ignored all of those factors. And you just looked credit, you would have seen Treasuries significantly outperforming the rest of the bond market. Credit told you: