- The Financials sector bounced back in the rankings last week, climbing three spots and moving into the second spot overall. Strength within the sector is broadly based as it is at the top of the rankings from an equal-weight perspective.
- Thanks to FB and GOOGL, the Communication Services sector is in the top spot on a cap-weight basis. On an equal-weight basis it ranks below everything except Consumer Staples.
- At the large-cap level, Transports are near the bottom of our industry group rankings. Mid-caps however, are showing strength and small-caps are improving.
[PLUS] Weekly Top 10 Report
From the desk of Steve Strazza @Sstrazza
Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we’re currently seeing in asset classes around the world.
Whipsaws Around The World
One of the most common characteristics of choppy markets are whipsaws. The chart below is a great example of this kind of price action, and we’re seeing it all over the place of late. Many risk assets recently violated key levels of support, but ultimately repaired the damage and reclaimed them. This type of action continues to reiterate that while the market is bending, it’s not breaking. The list of new lows in our internal breadth metrics remains muted, and critical indices and commodities, such as Energy, continue to hold their heads above important levels.
There’s an old adage that “from failed moves come fast moves in the opposite direction.” Is this what could spark the next leg higher for the market? Time will certainly tell, but it’s leaning in that direction, at least in the near term.
[PLUS] Weekly Momentum Report & Takeaways
From the desk of Steve Strazza @Sstrazza
Check out this week’s Momentum Report, our weekly summation of all the action from 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 context of the big picture 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. [Read more…]
[PLUS] Weekly Observations & One Chart for the Weekend
From the desk of Willie Delwiche.
[PLUS] Weekly Town Hall Meeting w/ Willie Delwiche
This is the video recording of the August 26 Town Hall Meeting w/ Willie Delwiche
08/26/21 2PM ET [Read more…]
“I Understand How Hard This Game Is…”
From the desk of Willie Delwiche.
I’m not the biggest sports fan in the world.
This probably makes me a bit of an All Star Charts outlier. I don’t watch many games of any kind (especially during the regular season). Nor am I a good source for offseason updates or perspectives on roster moves and coaching changes…
But now’s a great time to be interested (even casually) in the Milwaukee sports scene. We had the Bucks winning the NBA championship earlier this summer. Now the Brewers have one of the best records in all of baseball and a division lead that’s approaching double-digits heading into the final month of the regular season.
I keep tabs on the Brewers the old-fashioned way–reading about them in the newspaper. This morning, I came across this quote from Kolten Wong, second baseman and leadoff hitter:
“You’re competing against pitchers who are throwing 100 (mph), command three or four pitches. Guys don’t really care if you’re in a slump at this level; they’re going to continue to bury you.”
That perspective transcends baseball. It’s a warning that applies directly to investing. The environment can be challenging, and the market can throw a lot at you. If you fall behind and press, it’s all too easy to get buried.
But Wong follows up with this wisdom:
“I just understand a lot more now. I understand how hard this game is. My outlook on the game is different. I’m just going out there and competing, trying to do whatever I can to have a good at-bat and the results will take care of itself.”
Even when the game gets messy, don’t press. Don’t try to mimic someone else’s process or wish for a different market. Neither of those “solutions” are going to lead to great outcomes.
Instead, maintain your discipline and stay focused on your process.
This may include taking some time to better understand the theories and principles you bring to your observations and actions. As Darwin said, “You cannot observe without a theory.”
Take what the market gives you and work with it. Turn theory into practice.
Is it a messy market right now? Absolutely… has been for months.
Is it difficult to stay focused on your plan and your approach? Yes. Now and always.
But when we understand what is under our control and stay focused, results follow.
The Brewers are proving it on the baseball diamond. We can see it in the market, too.
[PLUS] Weekly Sentiment Report
From the desk of Willie Delwiche.
Key Takeaway: It appears the bulls are preparing to pack it up and call it a day. Dark clouds are starting to roll in, as the slow deterioration beneath the surface has taken its toll. New highs and a relentless rally in the major indexes paint an alternate reality versus the experience of the average stock–a reality that hasn’t quite sparked the interest of the bears so much as it’s exhausted the bulls. Active investment managers continue to taper their exposure, and advisory services have turned their least bullish in more than a year. A storm is brewing in the form of a re-set in sentiment. As it inches closer, the question becomes more of “when” and “how,” not “if.”
Sentiment Report Chart of the Week: New lows in new highs
Indexes are making new highs, but beneath the surface the case for more caution on the part of investors makes more sense. There are many ways to describe the deterioration that’s been ongoing for months now. Here’s one more: For only the second time in the past two decades, the S&P 500 Index made a new high while more stocks on the NYSE+NASDAQ have been making new lows.
[PLUS] Dynamic Portfolio Management: Follow Crypto Strength
From the desk of Willie Delwiche.
As we’ve still yet to see a decisive shift to a risk-on environment, caution remains the general guiding principle for this market. At the same time, there are opportunities in crypto that we’d like to take advantage of.
In the Cyclical portfolio, we’re shifting domestic equity exposure from small-caps (IJR) to mid-caps (IJH). Small-caps have been stuck below a now-falling 50-day average for nearly two months, and our industry group rankings show small-cap groups losing relative strength versus both large-caps and mid-caps.
Two things to note in the Tactical Opportunity portfolio update – a change that is being made and one that is not being made. First, we’re putting some cash to work by adding a 5% position to Ethereum (ETHE). Breakouts are being seen across the crypto space, and we want to follow that strength. Second, we’re keeping our exposure to commodities (DBC) for now. We’re giving it the benefit of the doubt, as the longer-term up-trend remains intact.
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