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.

Struggling With Supply

When we zoom out and look at structural trends there are bases everywhere. This is true for all risk assets, not just stocks, and we’re seeing it on multiple timeframes. Some international indexes are consolidating beneath their dot-com bubble highs from over 20-years ago. Many others, like Emerging Markets and the MSCI World Ex-US index, are currently churning beneath their 2007 highs. Then there is crude oil and small-cap financials (shown in the chart), which are just some among the long list of charts that are still consolidating beneath their 2018 highs. This is a critical level because it is when risk peaked around the globe during the last cycle. Last but not least, there are a lot of stocks and commodities that are currently digesting last year's gains beneath their 2021 highs. The point is that risk assets are still dealing with a lot of overhead resistance, and this is true across...

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.

From the desk of Willie Delwiche.

This idea came up in passing in our ASC+Plus weekly Townhall yesterday. The messy action in Copper looks a whole lot like the messy action in Berkshire Hathaway. After peaking in Q2 both have moved sideways. Copper has been more volatile than Berkshire, moving quickly to go nowhere. They are both up more than 20% for the year, but that has been true since late-April. It’s interesting that neither broke out to new highs in November and neither has (yet) broken down to new lows in December. When we get new highs or new lows from one or both of these bellwethers, we will definitely take notice. Until then it’s more sideways actions, with volatility in search of resolution. 

This is the video recording of the December 9th Weekly Town Hall w/ Willie Delwiche & JC Parets

12/09/21 2:00 PM ET

From the desk of Willie Delwiche.

It’s that time of year again -- a time when our inboxes are overflowing with reflections on the year that was and speculations on the year that will be. 

We used to wait until the year ended before recapping its events and previewing what lies ahead. But these annual outlooks have been showing up earlier and earlier in recent years. In fact, I think I saw my first 2022 outlook piece before the calendar flipped to December...

I read my fair share of outlook pieces and would not go so far as to say they are all useless. I prefer those that identify a few broad themes for consideration over those filled with detailed forecasts and a veneer of precision. After all, we should recognize the limits in the usefulness of even the best prediction pieces.

From the desk of Willie Delwiche.

Key Takeaway: Volatility is on the rise and the bulls are in retreat. The recent downside pressure on risk assets has driven investors to take caution. Yet, pessimism remains subdued as volatility was unable to stoke real fear. Now that the market is beginning to rebound, the bullish case needs to prove it deserves the benefit of the doubt. Price needs to justify the risk appetite that still lingers and participation needs to expand. On the flip side, another spike in volatility could woo the bears out of their seats and onto the dance floor. The market finds itself at a critical juncture heading toward year end. The action that unfolds in the coming weeks could well shape investors' approach to risk in 2022.

Sentiment Report Chart of the Week: Despite Some Caution, Investors Still Love Risk

Most of our sentiment indicators show more caution on the part of investors. When looking at Semiconductors, which are making new highs on an absolute and relative basis, the...

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.

From the desk of Willie Delwiche.

From the desk of Willie Delwiche.

Key Takeaway: Indexes stumble as generals see their armies fleeing the field. Bond yields drop below important thresholds. Rising volatility brings focus back to managing risk.

• Energy slipped three spots (from 4th to 7th) in the large-cap rankings last week, and the sector appears even weaker beneath the surface. It's in the ninth spot on an equal-weight basis, and conditions are deteriorating within the mid-cap and small-cap energy space.
• Technology remains atop the overall rankings, but relative strength on a short-term basis is from coming from Utilities, Real Estate and Consumer Staples.

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.

Stocks Test September Highs

The Dow Jones Industrial Average and the Dow Jones Transportation Average are both struggling at key Fibonacci extension levels from their 2018 drawdowns. Mid-caps and bank stocks are trapped back beneath key levels of overhead supply at their first-half highs. And the small-cap Russell 2000 is trading back toward the lower bounds of its year-to-date range. The majority of stocks are simply consolidating in holding patterns right now.

When we zoom in on the S&P 500, as we’ve done in the chart below, the importance of the September highs is hard to ignore. In November, price rallied to the first extension level from its fall drawdown. In the few weeks since, the index has retreated straight back to its prior peak near 4,540. For now, buyers are digging in and defending these pivot highs. Bulls need this level to hold if stocks are going to stop the bleeding and carve out a...

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

• Our macro universe was in the red again this week, as 68% of our list closed lower, with a median return of -0.42%.
• Lumber $LB was a massive winner, closing out the week with a gain of more than 18%.
• The biggest loser was US 10-Year Yield $TNX, with a weekly loss of -9.38%.
• There was an 11% drop in the percentage of assets on our list within 5% of their 52-week highs (currently at 38%).
• 64% of our list made...

From the desk of Willie Delwiche.

While the Fed may be newly focused on inflation, the bond market does not appear to be similarly inclined. The yield on 30-year Treasury bonds this week has undercut its summer lows near 1.80% and the 10-year t-Note yield has dropped below the 1.40% level that has been important in the past. Moreover, the yield spread between 2’s and 10’s has dropped to its lowest level of the year. This drop in yields (reflecting strength in bonds) is not inconsistent with deteriorating equity market conditions seen beneath the surface (as well as increasingly at the index level). Coming about always carries risks, and the Fed is trying to change course in choppy waters.