How's the market done in 2021?

I'd group January as part of last year and pay more attention to what changed in February.

The 2nd week of February is when things were the best they've been. That's when the Nasdaq Advance-Decline line peaked, that's when Emerging Markets peaked, that's when the IPO index peaked, that's when Biotech Stocks peaked, that was when SPACs were on fire.

That was it.

And we discussed it all on the podcast with Josh and Michael last week.

But the Cyclical stocks, including Financials, Materials and Industrials continued making new highs into May. And that's when another massive group of stocks stopped going up.

This chart shows the percentage of stocks in the Russell3000 that are above their February and May highs:

We've anchored these scans to two important dates this year, specifically when things first changed, and then when things got worse.

You can see both lines below the S&P500 go from the upper left to the lower right, meaning things have been getting worse from those points, not getting better.

And that's where we are today.

In the middle of a messy market environment in the middle of August.

Do you want to pretend that it's not that?

You're welcome to.

But I'm more interested in recognizing that some stocks are going up, most haven't been. And that can be changing.

We're starting to get a slight pickup in new highs and we're NOT getting any expansions in new lows.

If these lines above start to go up, instead of down, my bet is that we've entered into an environment where it's easier to make money buying stocks.

Some Large-cap Indexes in the United States have been going up in recent months. But that's about it. US Small-caps, Mid-caps, Micro-caps, Cyclicals, Emerging Markets, and many developed markets around the world have NOT been going up.

I think that changes for the positive.

And I think these charts above can help confirm that it's happening.

Maybe it takes a little longer. But I think that's the higher probability outcome.

JC