Introspection is a great quality to have. While a lot of introspection goes into life in general, many market participants fail to identify their errors because they do not review their actions in the market. The one thing that needs to be clear is that no new money is being created in the market. The money is simply shifting hands.
Are Energy and Financial stocks about to lead the market?
Cyclical groups are catching all the right tailwinds in this environment.
Crude Oil and Yields are pressing to new 52-week highs as investors continue to favor more economically-sensitive stocks and commodities in general. This is a bullish development and supports higher prices for some of the most beaten-down risk assets... even Financials and Energy.
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.
This week we're looking at two long setups from the Energy space. Nifty Energy has performed well and its time to start observing its constituents more intently.
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.
When you really dive in and see what's going on, it becomes quite obvious that this will end in disaster for many investors.
Do you know why?
Because that's what always happens.
So what?
Why is that our problem?
What does that have to do with investing and helping my family?
If you take maybe just 30 seconds to study history, you’ll find that most uptrends were not bubbles. They were just uptrends.
There were things that happened this month and even last year that have never happened in the market before. There were even some events that only occurred a few times in history.
So what?
Every month and every year we see the market do things that it's never done before, or maybe has done very rarely.
If you really want to get into it, we see something happen every single day that rarely happens, if at all.
So what?
We can make a big to-do about it, if that's your modus operandi. Remember it's a lot of people's job to sensationalize everything. Way more people than you think. And in many cases, the ones with the loudest mics.
Constructing a narrative can be risky behavior if you end up trusting the story more than the incoming evidence. When you can remain objective, however, it allows you to position for an expected outcome and then test whether that outcome is being realized. Form a hypothesis and test it. Know your parameters beforehand, don’t seek to justify the action after the fact. If the facts change, change your mind. We’ve been discussing the prospects of a global coordinated rebound in growth. The evidence at hand suggests we are indeed seeing that. I see the chart below as the who, what, where, and how of this story. FCX is mining for Copper in EEM using CAT. If any of these start to falter, it will suggest the story is changing. Currently, that is not the case.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Are we finally entering the long-awaited alt-season?
We're seeing incredibly healthy rotation within the Cryptocurrency space, which we can only interpret as support for higher prices for this group of digital assets moving forward.
Here's a post in October where JC outlined that the path of least resistance was higher in BTC, and another in December where we outlined a target, which was hit in a matter of days. Our current target for the Crypto leader is 70,000.
The price action is clear: Crypto continues to benefit from a well-established uptrend.
Our main focus today is the broadening participation of many Altcoins (lingo for any Cryptocurrency not named Bitcoin).
When the world gets back to normal, you have to believe people will be itching to get back on the road and start traveling again. There are a number of industries that will benefit from this, of course.
And one stock from a beaten down sector in 2020 is making new all time highs right now! This is the kind of trade I want to get into.
This week marks the one-year anniversary of the top in 2020 for the S&P500, Dow Jones Industrial Average and Nasdaq100 Indexes.
Everything immediately fell apart after that and we experienced one of the greatest crashes in history.
This leads some people to think that with these indexes now making new all-time highs once again, a crash can happen at any time....
But what most people conveniently like to forget is that everything else had already been rolling over by this point last year. The only indexes left still making new highs were those 3 U.S. Large-caps.
Today, let's run it back to last year and see what was actually going on, so you can see just how different things are today. All of these charts are from posts and client presentations I gave last February.
First, take a look at Small-caps, Mid-caps and Small-caps all making lower highs by this point last year:
