From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Welcome to our latest RPP Report, where we publish return tables for various 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.
We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.
In our last report, we discussed all the whipsaws we had been witnessing in recent weeks and noted that the next major piece of information would be the velocity of the reactions these charts made in the opposite direction.
Fast forward to today and the bulls got all the follow-through they could want as many risk assets reclaimed all their damage and more. These were true failed breakdowns, and we're still seeing those fast moves carry on higher today.
But today is a special occasion. We just got new monthly candles. So that's going to be the focus in this week's report.
Long story short, we have a lot of failed breakdowns bouncing aggressively off support in the weakest areas. More on that to come in a post soon. At the same time, we have a ton of new highs from the strongest areas.
Let's talk about some of them now.
First up, we'll discuss the primary US indices.
It's hard to look at monthly charts without paying attention to the 9 of 10 positive up months since November last year.
As we'll discuss, while the trends for the better half of this year have no doubt been messy, they're all in the context of long-term primary uptrends - very strong ones. The only ones that aren't are the defensive groups relative to the broader market.
This reinforces our view that we're in the early innings of a new bull market.
While this one breaks today's rule of monthly charts, we'd be remiss if we didn't share it. It's amazing how well Small-cap and Mid-cap Transportation stocks have done relative to Large-caps. This action is really the opposite of how all the other sectors are behaving.
Last week, we discussed the recent relative weakness out of Mid-Caps:
This index went sideways for 5-months last year while mid-caps lagged relative to the S&P. Fast forward to this year, and we can say that mid-caps have gone sideways for 4 or 5 months again while the index underperforms the S&P. Is this failed move off of support ~0.11 the spark this group needs to kick off a relative trend reversal in favor of mids?
And when we zoom out on the group, this looks like a high and tight bull flag in the context of a powerful uptrend.
Let's move to our sector section:
What's the big theme here?
All-time highs, and lots of them. Consumer Discretionary, Tech, Healthcare, Communications, and Staples...
Even Utilities are right there...
In fact, there were so many all-time highs that there wasn't even space to fit in Financials $XLF into this chart. As we'd joke, that's information...
As I'm sure long-term readers are getting sick of this chart, we throw it around for good reason: it's extremely difficult to be bearish over any meaningful timeframe with Financials resolving higher out of an over decade long base.
Industrials aren't far off all-time highs too.
But looking at it equally-weighted, RGI achieved new all-time highs to close out the month:
Above 192, and the bias is higher toward 240 over the next 3-6 months.
Let's check on our industry groups.
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