Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
Fed and bond market moves become headwinds for stocks.
In addition to these market concerns, the liquidity backdrop is presenting a more acute challenge for equities. The Fed raised rates 25 basis points last week and the futures market is now looking for another 100 basis points of tightening combined at the May and June FOMC meetings. Corporate bond yields are rising at their fastest pace since the financial crisis and more than half of global central banks are now in tightening mode. During the last cycle, it took the 2-year Treasury yield more than 6 years to move from its low to back above 2%. This cycle it completed that move in just over 1 year. The pace of tightening (from the bond market and from the Fed) matters for equities. Stocks tend to struggle when that pace is elevated, as it appears to be in this cycle.
For some time, we've reiterated our neutral approach. By staying out of the market in this sloppy tape, we've avoided emotional and financial whipsaws.
During this period, we've been downright obnoxious about how little edge there is in pushing longs.
But this could finally be changing.
As we'll discuss in today's note, we're seeing signs selling pressures are beginning to subside. Price action is heavily coiled, and the clock's ticking for a resolution out of this range.
Looking ahead into April, we forecast a high probability of an upward resolution from this consolidation.
Trading opportunities aren't limited to just U.S.-based corporations. And thanks to ADRs, we don't have to go to other foreign exchanges to exploit opportunities in different countries. These companies have tracking shares -- often with tremendous liquidity -- on our exchanges here.
One such opportunity, with a big base that is showing signs of resolving higher, recently appeared in our International Hall of Famers report last week.
The highlight of today’s list is the Altimeter Capital Form 4, which revealed a $7 million purchase in the mid-cap software stock Confluent $CFLT.
Altimeter now owns 5,131,700 shares of CFLT.
There was also a significant Form 4 filing by Sequoia Capital’s Roelof Botha, detailing a purchase in the diagnostics and research company Natera $NTRA.
Botha purchased roughly $5 million of NTRA stock, bringing his total share count to over 1.3 million.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Gold looks like it’s ready to run.
The largest gold miner in the world, Newmont Mining Corp. $NEM, has broken out of a multi-year base.
Silver and platinum have dug in at critical support levels and are catching higher.
And, most importantly, gold is in the process of reclaiming its former all-time highs from summer 2020.
These are all bullish developments, suggesting gold -- and precious metals more broadly -- are ready to join in on the party that most commodities have been enjoying for more than a year.
Last month, gold broke above its former 2011 highs near 1,924. Here’s a zoomed-out view of the chart:
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let’s dive in and take a look at some of the most important stocks from around the world.
Is that a dead cat bounce in the Biotech ETF $XBI that will quickly fade? Or is this week's hard pivot off the $80 level the new floor?
I don't know the definitive answer, but the bet I'm going to make is that $80 will hold at least for a few weeks. If it does and as long as $XBI doesn't overshoot on the upside from here, I think this ETF is offering us a great opportunity to sell some premium here.
