From the desk of Willie Delwiche.

Key Takeaway: Financials & bond yields finished last week at new recovery highs.

They were joined by the most stocks ever on the NYSE + NASDAQ making new 52-week highs.

Small-cap leadership is intensifying as stocks reflect better than expected earnings and optimism about the path of economic growth.

Financials and Energy climbed in our S&P 500 relative strength rankings last week. Curiously, among small-cap sectors, Financials have been more of a laggard than a leader. With Consumer Discretionary slipping in this week’s rankings, Technology has moved back into the top spot. Small-caps dominating large-caps in our industry group relative strength rankings is not too surprising given that the top nine groups on a YTD return basis come from the small-cap index and the bottom four groups all come from the large-cap index. 

There's nothing wrong with betting on the next direction of a stock, or the market in general. But let's be responsible about admitting that we're wrong, when we get it wrong.

Regardless of your strategy, whether it's technical, fundamental, economics or even if you base your analysis on the movements of the stars and the moons, it all comes down to risk management.

How good are you about admitting that you got it wrong and moving on? If you suck at it, then you're not going to do very well and you'll be gone soon. That's economic Darwinism at it's finest.

The ones who are the best at admitting they were incorrect in their assessment, and doing so the fastest, are the ones who make (and keep) the most money over time.

It's really that simple.

How do you lose weight? Eat less and workout more. Duh.

But cupcakes and pizza are delicious.

Just like...

From the desk of Steve Strazza @sstrazza

Another fresh 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 Steve Strazza @Sstrazza

In a further 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 the watchlist.

We've already had some great trades from this universe 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.

And what better time than now to launch a small-cap focused column!? We've seen very strong evidence of a structural rotation down the market cap scale, suggesting a new period of outperformance from small-caps in the coming...

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.

Willie tweeted this morning and made reference to some of the staggering median stock performance numbers off the 52 week lows. Again, not a lot of context here but some of these numbers are very eye opening. IWC (Micro caps) are +175.8% off the 52 week lows!

This week we're looking at two long setups belonging to the Financial Services sector that has been performing well.

We retired our "Five Bull Market Barometers" in mid-July 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.

What overbought conditions? We haven't even broken out yet. Take a look at what's actually going on!

After 14 years of no progress, Financials just went out at a new all-time high!

This is arguably the most important sector in the world. We don't have bull markets without Financials, at least, participating.

Just imagine them emerging as a leadership group...

From the desk of Willie Delwiche.

Allowing fundamentals to select your universe and technicals to dictate your action can increase the odds of success.

The Value & Momentum ETF (VAMO) has a small/mid-cap value bias with a momentum factor overlay.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

Leadership in this environment is stretching far and wide.

We're seeing a growing number of industry groups and areas not only making new highs but also outperforming and offering us more and more avenues to express our bullish thesis on stocks and risk assets in general.

Last week, we discussed Commodities and Ags.

The week before that, we dove into Chinese equities.

And for some time now, we've been vocal on SMIDs in general.

The point is, with such an overwhelming amount of leadership these days, we can be picky and place our bets on only the best of the best in each group.

In today's post, we'll explore a hot new growth industry we haven't covered in much detail yet - Autonomous Vehicles.

We'll discuss the broad-based strength we're seeing from this group of stocks, and outline setups in some names we're...

You have 2 choices:

1) You can complain that you don't like the rules, you don't like the people who make and enforce those rules, you don't like the people who take advantage of those rules and you can take your ball and go home. You can do that. You have that right in this country.

or

2) You can acknowledge the fact that you don't like certain rules, you may not like some of the people who make and enforce the rules, and you especially don't like some people who take advantage of those rules. But if you can't beat them, join them!

We choose #2. Because this is nothing new. We figured this out decades ago.

Welcome to the market.

Enjoy!

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

As JC pointed out the other day, this week we saw the most amount of new 52-week highs in the history of the Nasdaq.

That's right. The highest reading ever. That's bullish.

We've also witnessed another very encouraging development in market internals of late.

Let's talk about it...