From the desk of Willie Delwiche.

Our weight of the evidence dashboard argues for caution, as risk outweighs opportunity. This is echoed by our Risk Off - Risk On indicators, which never showed a decisive move toward Risk On assets as stocks moved off their lows in March. Assessing the situation through the lens of various intra- and inter-market relationships, our range-o-meter shows a move toward Risk Off leadership over the past month. Risk Off assets are gaining strength, Risk On assets are stumbling. Where things go from here remains to be seen. None of us can predict the future. But we can identify whether we are in a higher risk or lower risk environment and adjust our portfolios accordingly. One of the best things I heard at last week’s CMT symposium came from Frank Teixeira: “The market gives you a lot of information if you are willing to listen for it.”        

This is the video recording of the May 5th Weekly Town Hall w/ Willie Delwiche.

05/05/22 2:00 PM ET

From the desk of Willie Delwiche.

I had a great time in DC last week, first for some dedicated time with the All Star Charts team that is normally dispersed all over the world, and later at the CMT Symposium itself. There was good food and drink and great conversations – in larger settings and small. 

As great as the presentations were overall, I often found myself chewing on asides and tidbits more than the large macro points. For me, the key insights were more about process and less about conclusions. Maybe that’s not surprising. Conclusions come and go based on market conditions. But process and approach should be consistent (though not immune from the refiner’s fire). I think Tyler Wood said it best last week, “We’re not predicting the future, just reacting responsibly.”

Things I picked up last week that I want to hold on to:

From the desk of Willie Delwiche.

From the desk of Willie Delwiche.

This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.

In Focus for May: The first four months of 2022 have been a trying time for many investors. But while stocks have experienced their worst start a year since before the S&P index was expanded from 90 stocks to 500 stocks, the decline in the index has actually been a relatively normal correction. It’s premature to suggest that the lows are in, but the 13% decline in the S&P 500 from its peak is in line with the median experience of the last 9 times (dating back to the late 90’s) that the S&P 500 experienced a decline of 10% - 20% (less than 10% isn’t considered a correction, declines of more than 20% usually get characterized as bear markets).

From the desk of Willie Delwiche.

Key Takeaway:

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Indexes Hit New Lows

We’re seeing more and more stocks and indexes resolve lower from distribution patterns and violate critical support levels. Many more are on the brink, challenging pivot lows and threatening to follow their path.

The Nasdaq 100 (QQQ) and Russell 2000 (IWM) are excellent examples of this as both are violating their recent lows and resolving to the downside. We’re paying extra special attention to these patterns as their breakdown levels coincide with the AVWAPs from the COVID lows. These levels represent the price the average investor has paid for shares since March 2020, making them logical potential support zones.

Now that these indexes have taken out the confluence of support at their pivot lows, we’re likely to see further downside and increased volatility. Bulls need to come out and repair this damage immediately.

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

From the desk of Willie Delwiche.

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Selling Spreads

Speaking of leaders, even the strongest stocks have come under pressure in recent sessions. There was no good place to hide toward the end of last week as stocks were being sold indiscriminately. We saw the start of this on Thursday as the market leaders came under serious pressure. Friday, that volatility accelerated as investors shrugged off record earnings numbers and took profits across the board.

Over the past few months, we’ve seen money rotate into defensive groups or growth stocks in sessions where cyclical stocks have sold off. That wasn’t the case last week as the market was a sea of red.

Key Takeaway: