This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.
The New Growth Stocks
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Cyclical stocks are all the craze.
If you’re doing well this year, it’s because you own these stocks. If you’re not, it’s because you don’t own these stocks.
Whether we’re talking about energy, agricultural inputs, or industrial metals, these are the kinds of industry groups that are showing relative strength.
And, to be clear, this is nothing new. This theme has been in place for over a year now.
The only new development is that we’re seeing upside momentum in these names pick up. As a result, the gap between these winners and the rest of the market has widened to historic levels.
The reason why many of these groups are working is simple. They make their money by selling various commodities, and the prices of those commodities continue to rise at an extraordinary pace.
As such, these “value stocks” are now growing their earnings and revenue at levels that make SAAS companies wish they were in the commodity business.
For much of my career, I’ve listened to investors clamor over the incredible 30-40% growth rates that FANG names and other tech stocks have enjoyed for so long.
This kind of growth trajectory was enviable for much of the last decade because not many stocks could beat it. Today, we’re in a very different environment.
With a new bull market in commodities, Materials and Energy stocks are putting their operating leverage to work and reporting triple-digit top and bottom-line growth rates.
In some cases, we’re talking about earnings increasing by 5 or even 10x.
As long as commodities keep working, these figures are going to keep growing and these stocks are likely to remain in favor. We don’t see this trend ending anytime soon, so we want to keep piling into these cyclical names.
Let’s take a look at two of today’s biggest “growth industries,” copper and steel. [Read more…]
The Hall of Famers (03-25-2022)
From the desk of Steve Strazza @Sstrazza
Our Hall of Famers list is composed of the 150 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.
The Hall of Famers is simple.
We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
[PLUS] Weekly Observations & One Chart for the Weekend
From the desk of Willie Delwiche.
There is still one week to go before it ends, but Q1 2022 has been a remarkable quarter in many respects. If this year has taught us anything, it’s that a lot could change between now and when the closing bell rings next Thursday. But as it stands now, this will be the first down quarter for stocks since Q1 2020 and it will go down as the worst quarter for bonds in a very long time. Both stocks and bonds falling by more than just a marginal amount makes this a particularly forgettable quarter for investors in passive 60/40-type portfolios. There has been no place for them to hide. Not strength to offset weakness. Recent weak quarters for balanced portfolios saw strength in bonds offsetting weakness in stocks. Recent weak quarters for bonds have coincided with strength in stocks. The only somewhat similar experience in the past quarter century was Q3 2008 – bonds were down but only modestly. Two takeaways: First, this helps explain some of the dour mood among investors. Second, quarterly rebalancing this time around will have otherwise passive investors sell what has been weak (stocks) and buying what has been even weaker (bonds) because the consensus is that it is too risky to be in strength (commodities).
Here’s Why Bitcoin Is Going Higher
We do a lot of intermarket analysis here at Allstarcharts.
We include all asset classes and countries in our process.
How can we not?
I mean we have the time.
This is what we do.
And so, Australian dollar vs. Japanese yen has historically been a great indicator for me to measure risk appetite. That’s not just in the currency markets but, more importantly, in stocks and commodities as well.
So, take a look at what Bitcoin has been doing when compared to aussie/yen, one of my favorite intermarket relationships… [Read more…]
[PLUS] Weekly Town Hall w/ Willie Delwiche & JC Parets
This is the video recording of the March 24th Weekly Town Hall w/ Willie Delwiche & JC Parets
03/24/22 2:00 PM ET [Read more…]
[Video] Options Trading w/ Sean & JC | Nine Months to get “High”
For this week’s trade, we’re putting on a GrowGeneration $GRWG January 7.5/15 Bullish Risk Reversal for a small net credit.
This means we’ll be selling Jan 7.5-strike puts short and using those proceeds to purchase an equal amount of Jan 15 calls
Get the full details, risk management procedures and targets for this trade here:
Breadth Thrusts & Bread Crusts: Weird or Just Out of Context
From the desk of Willie Delwiche.
I had a chance to catch up with my friend Dave Keller this week. We talked about the overall market environment, touching specifically on market breadth and the implications of an accelerated tightening cycle by the Fed. You can check out a replay of the entire conversation here.
At one point, Dave asked me about my perspective on one of the most important questions facing investors right now. It’s about labeling oneself as either a growth investor or a value investor, and how to operate within that framework in the current market environment.
It’s important because it is pervasive. It’s important because it can be expensive.
It’s important, but it’s also weird, leading investors to discount reality and operate within narratives.
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