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:

• This week, our macro universe was negative as 66% of our list closed lower with a median return of -0.90%.
• Lumber $LB was a massive winner, closing out the week with a nearly 50% gain.
• The biggest loser was Oil $CL, with a weekly loss of -5.81%.
• There was an 8% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 62%.
• 34% of our list made new 4-week lows (versus 15...

From the desk of Willie Delwiche.

It’s no secret that we’ve been looking for evidence of improving breadth that would support last month’s breakouts in the small-cap and mid-cap indexes and provide fuel for a rally into the first quarter of next year. Instead we are finding evidence of the opposite - that rally participation is struggling to robustly expand. That’s the message when we look beneath the surface of the NASDAQ. The NASDAQ composite closed at a new high on the same day that the new low list rose to its highest level since March. March 2020. Another way to look at it (shown on the chart below) is that never in my career have I witnessed more NASDAQ stocks making new 52-week lows on the same day that the NASDAQ Composite made a new 52-week high. I don’t know if it will be the case this time, but when the market is heading for trouble,  new low lists crescendo in size. This is not unlike tremors before an earthquake.

This is the video recording of the November 18th Weekly Town Hall w/ Willie Delwiche

11/18/21 2:30 PM ET

From the desk of Willie Delwiche.

Last week, I wrote about how stillness can be the riskiest decision. 

This week, I want to discuss how periods of stillness can be part of the best approach. 

This idea brings to mind my favorite bird: the Great Blue Heron. If I have a spirit animal, this would be it.

From the desk of Willie Delwiche.

Key Takeaway: Bullish sentiment is on the rise. The bears may be reluctant to leave the party, but the bulls squarely outnumber their counterparts. The AAII survey shows bulls exceeding bears by two-to-one, and the II bull-bear spread is back within a high optimism zone. At the same time, options markets reveal that volatility and fear are being replaced by complacency. Though optimism has risen sharply during the past few weeks, current levels do not present risk. However, problems may arise when the lofty expectations associated with the sentiment backdrop are not met.

Sentiment Report Chart of the Week: Risk On Buffett Lacking Calories

While risk appetite has returned (NASDAQ and CBOE equity options volume have turned sharply higher), this is not translating into clear strength from higher risk (e.g. risk on) parts of the market. To the extent that our risk on / risk off ratio has been moving higher, it has more to do with risk off weakness than because of risk on...

From the desk of Willie Delwiche.

Key Takeaways:

• Inflation pressures surge and market is looking for more
• Bonds pricing in rate hikes but real yields remain buried in negative territory
• Gold finally taking a shine to favorable fundamentals as price action improves

Fed Chair Powell has referred favorably to the Trimmed Mean PCE Price Index, published by the Dallas Fed, as a gauge of inflation that does a good job of tuning out noise and distilling the trend. Looking at this index, there have been a couple periods over the past decade when price pressures softened and inflation unexpectedly fell short of the Fed’s 2% goal. Even still, inflation bottomed in the immediate wake of the Great Recession and has been trending higher since. In the months prior to COVID, the Fed was hitting its inflation goal and the 12-month change in this index was edging up to its highest level in over a decade. Inflation has intensified over the...

From the desk of Willie Delwiche.

Key Takeaway: Inflation remains hot as narratives shift. Yields perk up as the bond market takes notice of price pressure. Gold catches a bid as real rates remain negative. Breadth trends point to US leadership.

• Recent leaders have become near-term laggards, with Energy and Financials dropping to the bottom of the shorter-term relative strength rankings. Energy remains strong overall across the rankings and our industry group heat map. The cooling in Financials could be more significant.
• Materials is gaining strength from a sector ranking perspective and is seeing improving trends in our industry group work. We are also seeing pockets of strength within Industrials (Capital Goods and Transportation) and Tech (Semiconductors).

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.

• This week, our macro universe was negative as 68% of our list closed lower with a median return of -0.38%.
• US 10-Year Yield $TNX was the big winner, closing out the week with more than an 8% gain.
• The biggest loser was Lumber $LB, with a weekly loss of -12.18%
• There was no change in the percentage of assets on our list within 5% of their 52-week highs – currently at 70%.
• 15% made new 4-week lows.
• Meanwhile, 21%%...

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.

The Bond Market Has the Answers

Another potential bearish development that is on our radar right now is continued pressure on the long end of the yield curve. While the short end has held up much better, we’ve seen long-duration rates crumble back toward their summer lows over the last month or so. While treasury spreads have contracted and the curve has flattened a bit since the summer, we don’t find these developments too concerning considering where yields have come from since last summer. It’s only normal for the short-end to play catch up a bit in a rising rate environment. Although, what bulls definitely do not want to see, is yields break down to new lows on an absolute basis. Since the long end is moving the fastest, the weakness will show up there first. As such, we’re watching the 30-Year US Yield very closely as it retests its key summer lows. It appears to have found support there for now....

From the desk of Willie Delwiche.

I’m no crypto expert - I don’t even play one on TV. But every week seems to bring a new story about ways in which cryptocurrencies will not only stick around but see wider usage in the economy and as financial instruments. I have no idea if this will be the case, but new highs this week in Ethereum (and others) suggest the market is looking in that direction. Whether it is an investing fad, gold for a new generation of investors or an entirely new asset class remains to be seen. A survey published by Pew Research this week shows that while nearly half (43%) of males 18-29 have invested/traded/used cryptocurrencies, only about one-sixth of the overall US adult population has done so. So if it is sticking around, it could very well still be early days for this space. We’ve dipped our toes in this water, using ETHE to gain exposure in our Tactical Opportunity Portfolio. It’s been volatile this year, but the trend (which we are following) has been up and to the right. Regardless...

This is the video recording of the November 11th Weekly Town Hall w/ Willie Delwiche

11/11/21 3PM ET

From the desk of Willie Delwiche.

After my daughter’s flight landed in Minneapolis, she had to hurry through the terminal to catch a bus for the ride that would complete the final leg of her trip back to college. She did a great job of navigating uncertainties and asking for directions. She went where she was told and saw people, but no bus. "Just wait here," she was told, "the bus shows up, you get on, and it leaves right away."

A couple of buses came, some people got on, the buses left. Meanwhile, her ride was still a no-show. 

But people who appeared to be in-the-know said she was in the right spot. 

So she waited.