From the desk of Willie Delwiche.

The overall weight of evidence continues to argue for caution and we have yet to see a decisive shift toward a risk-on environment. But we have made some changes to our dynamic portfolios to stay in harmony with the shifting trends within the equity market.

In the Cyclical portfolio we’ve thrown in the towel on our Energy sector exposure and are positioning to benefit from the resumption of the uptrend on bond yields. Financials and other cyclical value areas appear poised for another round of leadership.

In the Tactical Opportunity portfolio we are putting some of our cash to work (though continue to have a healthy amount on the sidelines - remember cash is an asset class). We are adding to strength within our domestic equity exposure and see an opportunity to add global exposure at a time when many foreign ETF have already been struggling with overhead supply. 

Key Takeaway: Bond yields ready to move higher. Trends are still rising and inflation is proving persistent rather than transitory. Financials have been resilient but look for Growth to struggle if bond yields rise.

• Financials have quietly maintained a spot in the sector leadership group based on our relative strength rankings. They have been in the leadership group since November and have been the top-performing sector over the past year.
• The discrepancy in between the cap-weighted and equal-weighted rankings for the Discretionary and Communication Services sector puts on display the impact a handful of mega-caps can have on sectors (and indexes). Without the impact of FB and GOOGL, Communication Services would be one from the bottom rather than one from the top. The inverse is true with respect to Consumer Discretionary and AMZN.

From the desk of Steve Strazza @Sstrazza

Our Top 10 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.

These are some of the most important charts in the world right now in our view. If the global stock market is going to have the juice for another real leg higher, then we need to see the rest of the world participate. US Large-Cap Growth stocks have carried the baton and pushed the S&P to new heights, while many major diversified world indexes have consolidated. In fact, many of these countries and indexes have gone absolutely nowhere since February (they look just like small-caps).

But there isn’t just some overhead supply at these former highs from earlier in the year. There are dead bodies buried just above current levels where prices peaked prior to the financial crisis. Markets have memory. Polarity is real. We see it every day. It’s no coincidence that these stocks just stopped at the very same level they did back in 2007. And it also won’t be any real surprise to see them blast...

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 context of the big picture 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 performance was mixed again this week as only 55% of our list closed higher with a median return of 0.38%.
• The biggest winner of the week was the 10-Year Yield $TNX which gained 4.12%.
• Meanwhile, this week's biggest laggard was the VIX index $VIX, with a massive loss of -11.46%.
  • Higher rates and suppressed volatility support the new risk-on tone we've seen markets exude in recent weeks.
  ...

From the desk of Willie Delwiche.

It’s said that the most bullish thing stocks can do is go up. If something goes up enough, it starts to make new highs. Indexes like the S&P 500 and the NASDAQ 100, fueled by gains in a handful of mega-cap stocks, have been making new highs but beneath the surface, participation has been relatively narrow. Breaking the S&P 1500 into its component indexes, we see that while still not getting a plethora of new highs (especially at the mid-cap and small-cap level), we have seen some improvement over the past month. Encouraging, but not yet exciting. For that, we want to see new highs eclipse their early June levels (which for the S&P 1500 overall would be in the 200-250 range).

This is the video recording of the August 5th Town Hall Meeting w/ Willie Delwiche

08/05/21 2PM ET

From the desk of Willie Delwiche.

Key takeaway: A “no fear” attitude envelopes a market marred by mixed signals and deteriorating breadth. Large-cap indexes push to new highs while small and mid-caps trend lower. We even see an expansion in new lows further down the cap scale. But on the surface, optimism shines. Yet, challenges could lie ahead as a lack of risk-seeking behavior suggests a weariness among investors, and seasonal tendencies lean toward a lackluster performance in the coming months. For now,  equities remain the popular choice among market participants as investor sentiment obscures the fragile reality beneath the surface.

Sentiment Report Chart of the Week: Investors Love Equities

If you want to know what is loved, see where people put their money. Through the first seven months of the year, equity ETFs have seen more than $350 billion of inflows (over the past year, that number swells to half a trillion). Bond ETFs have...

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.

Key Takeaway: Indexes chopping higher, breadth chopping lower. Commodities leading the pack in 2021. Bonds not fearing inflation.

• Health Care made a new high last week and that helped fuel its rise in our relative strength rankings (up to the fourth spot and into the leadership group). Energy and Materials also ticked higher in the rankings, while Consumer Discretionary fell three spots.
• Despite an overall theme of large-cap strength, the industry group heat map shows deteriorating conditions across sizes for the Energy and Banks groups.

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 context of the big picture 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.

• Our Macro universe performance was mixed this week as only 62% of our list closed higher with a median return of 0.22%.
• The biggest winner of the week was the Volatility Index $VIX which gained 6.05%.
• 10-Year Yield $TNX shows continued weakness as this week’s biggest loser, dropping -3.65%.
• Momentum remains constructive from a structural perspective, as 60% of the assets on our macro list are in a bullish momentum regime....