From the desk of Steve Strazza @Sstrazza and Louis Sykes @haumicharts

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 in order to profit in the weeks and months ahead.

The major indexes continue to hold important levels and many large-cap sectors have laid the foundation for upside resolutions and another leg higher in their relative leadership. 

SMIDs and Micro-Caps have had every chance to digest their recent gains, but we're yet to see that play out. Seeing such strong upward momentum from these stocks speaks to the healthy risk appetite we continue to point out.

From the desk of Steve Strazza @Sstrazza.

We recently held December’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.

This is the video recording of the December 2020 Conference Call.

From the desk of Steve Strazza @Sstrazza and Louis Sykes @haumicharts

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 in order to profit in the weeks and months ahead.

We continue to pound the table on leadership down the market-cap scale. There's been strong evidence over the past few weeks/months suggesting this is a structural trend reversal in the large vs small-cap ratio.

For months now, we've been pointing to the fact that metals are doing great. It's just that Gold isn't one of them.

Base metals are where the smart money has been flowing. Copper has been hitting the highest levels since 2013 and absolutely embarrassing the performance of its precious metals counterpart, Gold which has not been so golden.

Copper outperforming Gold is consistent with higher Interest Rates, and we've been getting those too.

More specific to Base Metals on an absolute basis, the positive correlation with Emerging Market Stocks is off the charts. Here is Iron Ore making new 7-year highs overlaid with the Emerging Markets Index so you can see how closely they trade together:

From the desk of Steve Strazza @Sstrazza and Louis Sykes @haumicharts

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 in order to profit in the weeks and months ahead.

In last week's report, we discussed the continued rotation into SMIDS, international markets, and risk assets. Our conclusion is and continues to be that the market remains in a very healthy state of order.

FICC markets are also confirming the move higher in equities.

From a short-term perspective, SMIDS digesting their recent gains would be a healthy development.

During bull markets I always get asked about when it's going to stop. I don't get asked about stock market bubbles and unsustainable valuations during bear markets, that's for sure. Those environments come with other kinds of funny questions.

This morning I woke up to one of my college buddies telling me that tech valuations are too high and that this has to be a bubble.

Journalists ask me every day how this can possibly continue. "Too high", they say. "Too fast", they tell me. "Fed Printing", they claim. "It's only 5 stocks!!!"... I can't.

Anyway, maybe this is the top. Maybe we are about to crash. Maybe valuations are too high....

But there's no evidence at all that this is the top. New All-time highs are not characteristic of downtrends. They are things we see regularly in uptrends. In fact, new highs are perfectly normal, and should even be expected in this type of environment.

This week, Julie and I talk about some of the things that stood out the most on last week's Monthly Chart Review.

Among them were the Market Capitalization rotation into Small & Mid-caps and out of those Mega-cap stocks.

Germany and Japan making new highs leading the international charge higher.

And which rocks would we rather own: Precious Metals or Base Metals?

Check it out:

I think this is an important discussion. Which way are rates headed?

Remember, Interest Rates setting up for a collapse was one of the reasons we were so bearish equities in late January, and looking to own bonds instead.

The thought process in January was the following: If 10s are going to break their 2012 & 2016 lows, is that most likely happening in an environment where stocks are doing well? Or are rates collapsing most likely taking place in an environment where stocks are under pressure?

Our bet was the latter. We used rates as a leading indicator.

Today we're doing the same thing. But the data coming in is the exact opposite.

First of all, here are US rates going out last week at new 9-month highs:

This is the video recording of our December 1, 2020 Monthly Charts Live Strategy Session

This is the video recording of the November 2020 Conference Call.

From the desk of Tom Bruni @BruniCharting

Last week we discussed how Yield Curves across a variety of countries affect certain sectors of the Equity market like Financials.

Today we want to discuss why this week's action could suggest that US Rates are getting ready to "catch down" to the rest of the world.