For months now, we've been pointing to the fact that metals are doing great. It's just that Gold isn't one of them.
Base metals are where the smart money has been flowing. Copper has been hitting the highest levels since 2013 and absolutely embarrassing the performance of its precious metals counterpart, Gold which has not been so golden.
Copper outperforming Gold is consistent with higher Interest Rates, and we've been getting those too.
More specific to Base Metals on an absolute basis, the positive correlation with Emerging Market Stocks is off the charts. Here is Iron Ore making new 7-year highs overlaid with the Emerging Markets Index so you can see how closely they trade together:
We had over 250 charts in our internal chartbook, but cut it down to about half of that so it's not a marathon to get through.
We cover breadth indicators from percent overbought/oversold to new highs and lows, A/D lines, and more. We do this for all the major averages as well as sector indexes.
After digging through all these charts, we'd be remiss not to share some of our favorites with you. We'll go over some in this post.
Here we go with another round of our Top-Down Take weekly post. At All Star Charts we like to keep things simple and look at the bigger picture. We let the charts speak to us and then decide what to do. Always remember, the Trend is our Friend.
Today we’ll take a popular pick – Bajaj Finance - and see what what the chart has to say at current levels.
Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.
Nifty FMCG broke above its long-term resistance last week, moving out of a more than two-year consolidation. While the selected-few large caps from the sector have performed well with the rest of the market in the run up so far, we believe that the rest of the sector is on its way to play catch up.
Let’s take a look at the sector and see what the charts have to say.
The Mega-cap names have been digesting their 2020 gains since early September. Go one by one and most of them are down over the past 3+ months. All except the last one at the bottom.
From the desk of Steve Strazza @Sstrazza and Louis Sykes @haumicharts
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.
In last week's report, we discussed the continued rotation into SMIDS, international markets, and risk assets. Our conclusion is and continues to be that the market remains in a very healthy state of order.
FICC markets are also confirming the move higher in equities.
From a short-term perspective, SMIDS digesting their recent gains would be a healthy development.
Welcome to our “Under The Hood” column for the week ending December 11, 2020.
What we do is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
Whether we’re measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers… there is a lot of overlap.
The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we’re producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.
I'm not sure when this happened. When did they start grouping any company that uses a computer into the Technology Sector?
First of all, 80% of the FAANG stocks represent a ZERO weighting in the Technology Sector. ZERO.
Facebook and Google are in the Communications Index, together representing approximately 45% of that sector. Combined, $FB & $GOOD represent ZERO percent of the Technology Sector. Netflix $NFLX accounts for another 4% or so Communications, and again, a ZERO weighting in Tech.
Furthermore, Amazon represents approximately 21% of the Consumer Discretionary Index. When you look at the Technology Sector, you'll find that $AMZN has a ZERO weighting.
The latest version of journalists grouping any company that uses a computer into the "Technology Sector" is Airbnb and DoorDash. Neither one of these are in the Tech sector, but instead are both in the Communications Index. Together $ABNB & $DASH represent a ZERO weighting in Tech.
Meanwhile these are the fairytales they feed you...
Japan continues to rally as it breaks out to new 29-year highs.
And just think, the Japanese Nikkei225 can rip another 40% from here and still not get back to its highs from the late 1980s. That's how long it takes a bubble of that magnitude to correct itself.
Let's remember, at its peak in 1989, the real estate value of just one single park in Tokyo was worth more than all of the real estate in the state of California combined. I've been to that park. It's ok I guess. But not worth more than all of Cali, quite obviously.
So here's what that Nikkei chart looks like today:
This year has been fantastic for one sector in particular, and that is the Pharma sector. Stocks that had been in a secular bear move, reversed their trend late last year and have been trading higher since.
Let’s see if there are any opportunities in the current set-up as the sector prepares for its next leg higher (along with IT).
