At the beginning of each week, we publish performance tables for a variety of different 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.
In recent weeks, we've seen some rotation back into Large and Mega-Caps, which has propelled the major indices to new highs, while SMIDs are still resiliently consolidating. While the list of negative data points has grown, it's still not close to anything that warrants concern.
From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @GrantHawkridge
Following an onslaught of bullish initiation readings for US stocks last year, global equity markets began to register similar breadth thrusts earlier this year.
In this post, we'll take a look at those thrusts in addition to the current state of international stock market internals.
We'll even take a quick look at some of the differences we're seeing take place beneath the surface in various global markets.
Key Takeaway: New highs bring out the bulls. Excessive optimism offset by broad market strength in the US & around the world. Despite Fed assurances of patience, rising bond yields will soon put pressure on the liquidity backdrop.
Key Takeaway: The overall market continues to digest gains within a larger structural advance. Market sectors that relate to tangible goods push to new highs. Traditional safe-haven assets fail to ensure safety.
Financial, Energy, Industrial, and Material sectors continue their reign in our relative strength rankings, while mid-cap groups narrowly surpassed small-caps to command the top-tier of our industry group rankings. Though more defensive sectors continue to have the best relative strength on a short-term basis, Technology and Consumer Discretionary are starting to pick up in the near term as well. Small-cap deterioration persists at the industry group level, whereas large and mid-caps improve.
Key Takeaway: Even with bottlenecks & distortions, economic recovery & cyclical rally remain intact. Tactical risks have risen as the market digests gains of last year. Watch bond yields & global participation for evidence that the rally is ready to resume.
Key Takeaway: Small-caps hit pause but remain market leaders. Another breadth thrust shows rally participation remains robust. Bond yields are digesting recent rise, but the path of least resistance remains higher.
At the beginning of each week, we publish performance tables for a variety of different 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.
The market continues to fire on all cylinders right now. Last week's gains were nothing but a continuation of the same resiliency and momentum we've come to expect from risk assets over the last year.
Key Takeaway: New high lists are expanding, yet investors are turning more cautious. Weight of the evidence favors focusing on opportunity over risk. Commodity market strength encouraging development for economy and investors. Rotation to cyclical leadership has just begun.
Small-Caps have been outperforming the large-cap indexes by a mile so far this year.
Since January 1st, the S&P Small-Cap 600 is up roughly 25%, compared with just a 5% gain for the S&P 500, and 0% for the Nasdaq 100.
This leadership is showing no signs of slowing, as they once again led the market back to fresh all-time highs this week after a brief and shallow reset.
Not only has the momentum behind this move been astounding, but the S&P Small-Cap 600 just experienced another significant breadth thrust, this time in its percentage of new 52-week highs.
Let's take a quick look at these developments and what they mean for the group going forward.
At the beginning of each week, we publish performance tables for a variety of different 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.
Rotation into value is dominating the narrative right now as money continues to pour out of the former leaders and into long-term secular laggards like Financials and Energy.
In line with this trend, we continue to focus less on US Large-Caps and Growth, and instead look for opportunities in SMIDs, Cyclicals, and International stocks.
Key Takeaway: Crowded trades have come back to earth, but average stock and cyclical industry groups are making new highs. Economic momentum is building as recovery accelerates. Bond yields are still rising and long-awaited leadership rotation remains underway.
