From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Using the S&P 500 as your investment proxy, you’re probably happy with your returns so far this year.
That's even with the 5% pullback we finally saw last week -- the first 5% pullback for the S&P 500 in 2021, and it took 229 trading days.
But the averages aren’t telling the whole story. Some stocks are going up, but most are not. We've been pounding the table about this for months already, and it's been the main theme during the first three quarters of the year.
Unless you’ve been living under a rock, you already know the current environment is an absolute mess, as the weight of the evidence continues to hang in the balance.
In this post, we’ll show you why the S&P 500 is not the stock market and the stock market is not the S&P 500.
When we analyze equities as a “market of stocks” rather than “a stock market,” it becomes clear that we're in the thick of a correction that started as early as Q1.
Here at All Star Charts, we like to call this a stealth correction!
From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Bond yields are breaking higher across the board. So, it’s essential to understand that some stocks do better amid rising rates, while others prosper in markets with low growth and low yields.
For instance, cyclical and value stocks should outperform in a rising rate environment.
Meanwhile, growth, tech stocks, and any long-duration assets (bonds) typically lag. They become less attractive during periods where more economically sensitive areas offer more appealing opportunities.
And we’re already seeing this rotation into the rising rate beneficiaries, while growth stocks have come under pressure in recent weeks.
In today’s post, we’ll look at market internals of these groups to see what they suggest about recent price action.
We can compare growth to cyclicals by analyzing the ratio of Large-Cap Tech $XLK to Energy $XLE.
And we can further illustrate this growth-versus-value relationship through a variety of derivatives. They all tell similar stories.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Whether we’re talking about stocks, commodities, currencies, or even the bond market, things have been a total mess. It’s no secret, and you’re probably tired of hearing it by now.
Trust me, we’re just as tired of seeing it.
So, as these choppy conditions test our patience and discipline, why not use this opportunity to take a step back and examine where we’ve come from, where we are now, and where we’re likely headed.
In today’s post, we’re going to do just that by revisiting and analyzing some of our favorite breadth indicators and discussing what some of them are suggesting for commodities over the long run.
Let’s dig into it!
First, we need to understand that a breadth thrust isn’t a singular event. It’s a process that builds upon itself as a new bull cycle unfolds.
These thrusts in participation don’t all just happen overnight. Instead, they develop over shorter time frames at first and eventually culminate with a broad expansion in new longer-term highs.
From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Considering the selling pressure in recent weeks, we were very excited to take a look at our breadth indicators today to see if we finally saw some downside expansion worth pointing out. Spoiler alert: There was nothing there.
Being as we're in a sideways market, we're always on the lookout for a change in character in internals that might suggest some resolutions are finally on the horizon. And since bears have been driving stocks lower since early this month, our focus is on new short-term lows.
With the S&P experiencing some volatility and revisiting its 50-day moving average this week, did we finally get that "fall day?"
Instead, our focus has been on expanding global breadth. We believe the burgeoning participation in international markets is constructive for US markets, specifically for cyclical areas.
But are we beginning to see any signs of breadth expansion domestically?
In today’s post, we'll switch gears and turn our attention stateside to address participation among US stocks.
Let’s dive in!
Here’s a look down the cap scale at all three S&P indexes, from large to small:
The S&P 500 and the other US large-cap indexes have continued to grind to new highs all year, completely unphased by any of the deterioration in breadth beneath the surface.
But, when looking at the global stage, things are different…
In this post, we’ll look at the current state of market breadth around the globe and discuss whether internals are supporting the new highs in many international indexes.
It's always a worrying sign when price is making new highs at the index level with a lack of confirmation from internals. But that simply isn’t the case for ex-US equities these days.
In fact, it’s just the opposite, as we’re seeing our breadth metrics support and confirm the recent price action on a global scale.
Here we’re looking at the percentage of developed and emerging markets above their 50-day moving averages:
On this episode of the podcast, I sit down with Ed Clissold, Chief U.S. Strategist at Ned Davis Research.
I've been a big fan of Ed's work for a long time, not to mention Ned Davis is one of my personal heroes.
The work they do over there has been inspiring to me throughout my entire career. So as you can imagine, it was so fun and such a pleasure to chat with Ed.
We talk about Market Breadth, Sector Trends, Momentum and Seasonality.
If you have any exposure whatsoever in the market, or even thinking about putting on exposure, then this is the episode for you!
From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge
Whether more stocks are going up or down these days simply depends on where you look. Some advance-decline lines are moving higher, but others are moving lower.
Weakness and divergences in these indicators are more often than not resolved over time, but the longer they persist the more concerning they become.
This hasn’t been an issue for most of the major averages, as the S&P 500 and other large-cap indexes keep making new highs with confirmation from their A/D lines.
Yet when we look beneath the surface, and particularly down the cap scale, we're seeing a different story. Ultimately, some stocks are going up, but most are not.
You’ve probably heard already, but the current environment is an absolute mess as the weight of the evidence continues to hang in the balance. In today’s post, we’ll discuss some charts that do a great job illustrating all the mixed signals out there right now.
This week I had a chance to chat with my old pal Phil Pearlman, who's the Chief Behavioral Officer at Osprey Funds.
Phil and I have been talking markets regularly for over a decade, both behind the scenes and on YouTube.
Never in our wildest dreams did we think we would be here today discussing on-chain analysis of crypto currencies. But here we are!
In today's video we discuss two of my favorite gauges of sentiment, the exchange balances and the dormancy rates. We also touch on the current breadth in crypto markets as the percentage of coins breaking out to new 30 day highs continues to expand.
