The weekend is when we open all our chartbooks and go through every chart in order to update or follow trends and sentiments as they build over the week. But sometimes, a few names pop up even before we hit the weekend research start button.
Today we will discuss two such names that seem to be displaying resilience in the market over the past couple of weeks.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
I think we can all agree that the market is an absolute hot mess right now.
The Precious Metals complex is as good an example of this as any right now.
In this post, we’ll use this shiny group of commodities as a case study to illustrate the mixed signals we see not just here but in asset classes all over the globe these days.
It’s a major development, to say the least - so we’d be irresponsible not to monitor it closely as the way things resolve from here will likely have implications that span across markets, far and wide.
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
