From the desk of Steve Strazza @sstrazza

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 same themes that we've been pounding the table on more or less continue to drive primary trends.

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.

Developed Markets, particularly European equities, are resolving higher across the board -- a move confirmed by strong breadth and bullish internals. In short, we continue to see strong equity market...

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.

Let's dive into it.

From the desk of Willie Delwiche.

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.

Their short-term performance has been mixed, but our relative strength rankings still have Financials, Industrials and Energy holding down the top spots. The still unanswered question from the past few weeks is whether the short-term trends (e.g., Technology in the top spot, Energy in the last spot) represent the beginning of sustainable shifts in leadership or are part of the process of digestion after longer-term trends moved too far in the other direction. A similar question presents itself when looking at the industry group heat map. Small & mid-cap groups dominate the top of the rankings, but large-cap groups appear to be on something of an upswing. 

From the desk of Willie Delwiche & Ian Culley. 

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.     

From the desk of Willie Delwiche.

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.

Cyclical value sectors remain the leaders in our relative strength rankings and small-cap groups continue to dominate the upper-tier of our industry group rankings. But there is evidence beneath the surface of shifting trends. Rather than seeing a reversion back to growth leadership in our sector rankings, we are seeing defensive areas of the market start to heat up. Consumer Staples, Utilities & Real Estate have the best relative strength on a short-term basis. At the industry group level, small-cap groups are deteriorating while large-cap groups are improving.       

From the desk of Willie Delwiche.

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.

The Technology sector continued its descent toward the bottom of the relative strength rankings. It dropped to its lowest ranking since mid-2016 and fell out of the sector leadership group (which based on a three-week smoothing of the current ranking) for the first time in two years. Technology is joined in the cellar by Utilities, Consumer Staples and Consumer Discretionary. Cyclical value leadership remains intact. Even though small-cap groups led the way lower last week, our industry-group rankings continue to show leadership from small-caps and mid-caps.     

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley.

We recently held March’s Monthly Conference Call which our Premium Members can access and rewatch here.

In this post, we’ll provide a summary of the call by highlighting 5 of the most important charts/topics we covered along with commentary on each.

Let’s dive into it.

From the desk of Steve Strazza @sstrazza

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.

As for what's providing buying opportunities over the next few months and quarters, it is still strongly centered around cyclical areas pertaining to Energy, Financials, International Markets such as Canada...

From the desk of Willie Delwiche.

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.

Energy has climbed to the top of our sector-level relative strength rankings, occupying the number one spot across all three capitalization levels. Energy hasn’t been at the top of the rankings since mid-2018. We are also seeing sector-level leadership (again across all capitalization levels) in Financials, Materials and Industrials. Previous leaders continue to drop in the rankings as “quality growth” has fallen out of favor. Stubborn investors are sitting on their hands, adaptive investors are listening to the market and following these new leadership trends. Industry group rankings show small-cap groups dominating the top of the rankings, and large cap groups dominating the...

From the desk of Steve Strazza @Sstrazza

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.

From the desk of Steve Strazza @sstrazza

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.

Overall, the global equity market remains healthy, supported by strong breadth and rotation. Meanwhile, defensive assets like Gold and Bonds continue to underperform.

We've really been hitting on these themes a lot recently. Here's a quick recap of what we're seeing out there:

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From the desk of Willie Delwiche.

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.

The leadership rotation continues in earnest. From a sector perspective, Technology dropped four spots last week and is on the cusp of falling out of the leadership group for the first time since 2019. Consumer Discretionary dropped another two spots and except for Utilities, would be in the last place in the rankings. Gaining strength this week are Communication Services and Materials. Beyond all the improving and deteriorating conditions seen at the industry group level across market cap levels, our rankings show a consistent theme: 8 of the top 10 groups (and none of the bottom 10) are small-caps and 8 of the bottom 10 groups (and none of the top 10) are large-caps.