From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 29, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This was a special week as Friday marked the end of May which means fresh monthly candlestick data. Analyzing these long-term monthly charts every several weeks is a great exercise as it forces us to take a step back and identify the structural trends that are in place.

As such, this week’s theme is the continued outperformance over both the short and long-term from those areas sporting the strongest primary uptrends.

Tech $XLK is by far the best performing sector over the trailing year. It is also the 2nd best over the past month and quarter, behind Communications $XLC and Health Care $XLV, respectively. Not surprisingly, these same sectors are also the next best performers over the trailing year.

From the desk of Steve Strazza @Sstrazza

Sentiment has not been good for Chinese Equities with a handful of recent sanctions adding to the general uncertainty around China-US relations. For the most part, we're seeing this reflected in price as the Shanghai Composite and iShares China Large-Cap ETF (FXI) are trading at multi-month lows relative to the S&P 500.

Interestingly enough, the area being hit hardest with negative headlines is one of the few bright spots in China's market right now... Technology and Internet stocks.

In this post, we take a look at the improving relative strength from this group and offer trade ideas in some of its leading stocks.

Here is the ratio chart of the Kraneweb Chinese Internet ETF (KWEB) vs the S&P 500 (SPY) which we've been writing about since November.

Click on chart to enlarge view.

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 22, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This week’s main theme is risk-on action from beaten-down areas which we'll highlight in our US Index and Factor ETF tables, below.

We're putting a lot of emphasis on risk-appetite measures right now in order to provide insight into how the recent rangebound activity in Equity and Bond markets is likely to resolve itself.

The most basic way to assess risk-tolerance is to compare the performance of risk-on vs risk-off assets. As such, this post will focus on how the offensive vs defensive areas of various markets are acting right now.

Click table to enlarge view.

From the desk of Steve Strazza @Sstrazza

Yesterday, we wrote about the divergence in both structural and tactical trends between Dow Transports and Semiconductors. The bottom line is that Dow Transports (DJT), which is the traditional "Dow Theory" average, has been getting smoked relative to the "New Dow Theory" average, the Semiconductor Index (SOX).

While we don't know whether or not this can persist indefinitely or if these divergences will soon resolve themselves, we do know that Semiconductors remain one of the secular leaders and are thus an area we want to continue to bet on from the long side.

In this post, we'll outline some Trade Ideas in our favorite Semiconductor names.

Something all of these setups have in common is that they are exhibiting impressive relative strength vs the broader market. They also all resolved to fresh highs recently, which gives us a well-defined risk management level to trade against.

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 15, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This week's main theme is that the strong continue to get stronger and vice versa, which we'll highlight in our Industry and Sector ETF tables, below.

Notice how the top three performers this week also happen to be the only Industry ETFs that are positive over the trailing 3-month period?

Gold Miners (GDX), Biotech (IBB), and Internet (FDN) posting positive 3-month returns may not sound like much but is actually quite impressive as it means these areas have already taken out their highs from just before the broader market peaked and collapsed in February.

Click table to enlarge view.

From the desk of Steve Strazza @Sstrazza

Last month we wrote about the lackluster move from some of the cyclical sectors off of their March lows, particularly Industrials and Financials.

We continue to see weakness out of these areas over both long and short-term timeframes as Financials are pressing on all-time lows relative to the S&P 500 and Industrials just made a fresh relative 20-year low.

In this post, we'll take a look at these underperforming areas and share some trade ideas to express our bearish thesis.

First, let's take a look at the long-term relative weakness we just mentioned.

Click chart to enlarge view.

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 8, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Many of the relative trends in stocks that have been in place for a long time have come into question recently as they're showing signs of maturing due in part to the change in leadership we wrote about this week.

In this post, we'll highlight two structural intermarket themes that have remained robust throughout this tumultuous time for equity markets.

The first relative trend that hasn't slowed down at all is the relentless outperformance of the US over the rest of the world. Our first table shows the Wilshire 5000 (DWC) dominating every Global Index over just about every timeframe, from this week to the trailing year.

Click table to enlarge view.

From the desk of Steve Strazza @Sstrazza

Gold (GLD) broke out of a multi-year base last year and has more or less been trending higher since. No new news there.

But as JC explained in a post last week, Gold Miners (GDX) have finally broken out of a 7-year base as well after recently taking out resistance at key prior highs.

Today we're going to take a deeper look at the space.

We love setups like the one in Gold Miners right now. Not only did GDX resolve higher from a massive base but there is also a hefty amount of price memory at the breakout level which should act as solid support going forward.

Click on chart to enlarge image.

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 1, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This week we're highlighting the underperformance from the US using our Global Index and International ETF tables.

Click table to enlarge view.

Despite the Wilshire 5000 (DWC) closing slightly higher on the week, all major Large-Cap averages in the US closed lower. While equities sold off across the board to end the week, the Eurozone still managed to book a nice gain with the German Dax (DAXX) and Stoxx 50 (STOXX) up 4-5% each in what was a short week for much of the region.

The Nikkei 225 (NI) and Shanghai Composite (SSEC) each closed almost 2% higher in what was also a short week for much of Asia.

Here is an update to our Bull Market Checklist of 20 Items.

*Note: The Sensitivity column represents how close the asset is to the risk level in question

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, April 24, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

This week we want to highlight the continued divergence between Energy stocks and Oil using our Sector and Industry ETF and Commodity tables.

First, let's look at some of the longer-term leaders. Biotechs (IBB) just broke out to fresh multi-year highs and are one of the top performers on our Industry ETF list across all timeframes.

Aside from Gold Miners (GDX), they are the only industry on our expanded list of over 50 ETFs already back at fresh 52-week highs. Definitely some relative strength worth paying attention to in these areas.

Be sure to read our recent post on Gold Miners.

From the desk of Steve Strazza @Sstrazza

Yesterday I wrote a post about deteriorating market internals. I discussed breadth divergences as well as the lack of confirmation of the S&P 500's recent highs from many important sectors and indexes.

In this post, we're going to focus specifically on the Large-Cap Sector SPDRs that failed to make higher highs and are showing early signs of cracking. To no surprise, these are some of the most cyclical areas of the market including Industrials (XLI), Financials (XLF), Materials (XLB), and Energy (XLE).

This speaks to the lack of risk-appetite we continue to see not only within equities but across all asset classes right now.

You can see the first three sectors in the chart below. With Crude Oil futures crashing below zero this week, we think it's prudent to stay away from the Energy sector until the smoke clears.

Click on chart to enlarge view.