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[PLUS] Weekly Sentiment Report

May 11, 2021
JC Parets

From the desk of Willie Delwiche.

Key takeaway: A peak within the NASDAQ (or the Technology sector) shows that pockets of speculative excesses are being unwound. There has been enough strength in the market elsewhere, as well as a still favorable earnings and economic data backdrop, to keep investors generally optimistic. In March, market volatility allowed optimism to retreat from excessive levels but not completely unwind. We may be seeing early indications that the current bout of volatility will have a more substantial impact on investor psychology. If so, the price reaction will likely not be as benign as was seen two months ago.

Sentiment Report Chart of the Week: Unwinding Speculative Fervor

[PLUS] Weekly Observations & One Chart for the Weekend

May 7, 2021
JC Parets

From the desk of Willie Delwiche.

The headlines this week focused on the, for lack of  better word, carnage in some of the most speculative areas of the stock market. While late week rally attempts have taken some of the sting out of those declines, many of the hottest areas from 2020 are seeing more breakdowns than breakouts. While maybe not as exciting as SPAC’s and Innovative Tech companies, I’m paying attention to what’s going on in the Financials sector. The sector made new highs this week (as did Materials and Industrials), and its new high list expanded as well. The 75% of stocks in the sector making new 52-week highs is the highest in the decade’s worth of data we have available. Maybe I’m old-school, but leadership and broad support from Financials is not usually evidence of an overall market that is on the cusp of trouble.

Breadth Thrusts & Bread Crusts: The Only True “Life Hack”

May 6, 2021
JC Parets

From the desk of Willie Delwiche.

The documentary "Jiro Dreams of Sushi" tells the story of a small Sushi counter operating near a subway platform in Japan. The movie glorifies routine -- the day-in, day-out dedication to doing the same thing over and over again. It’s these details and pursuit of perfection that make the dream. We see how Jiro’s sushi is the product of hours of labor and years of experience.

Russian novelist Fydor Dostoevsky understood this concept well, noting "Habit is the chief motive force” in his novel "The Brothers Karamazov". 

Dostoevsky and Jiro understand there are no shortcuts. Instead, the embodied consistency of habit is how we grow and make progress.

[PLUS] Weekly Sentiment Report

May 4, 2021
JC Parets

From the desk of Willie Delwiche.

Key takeaway: Evidence of excessive optimism abounds. Recent articles in the Wall Street Journal provide anecdotes for the data: Conservative German savers are increasing their exposure to stocks and investors in the US are crowding into the market, focusing more on chasing returns than managing risks. Cyclical views trend and strategic positioning point to elevated risks but stocks have been buoyed by a favorable news backdrop (positive economic data surprises and upward earnings revisions) and resilient breadth. If these falter and investor appetite for risk fades, those areas of the market where speculative fever has burned the hottest could be the most vulnerable.

Sentiment Report Chart of the Week: Long Equity Camp Crowded

[PLUS] Weekly Market Notes & Breadth Trends

May 3, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: New monthly highs reflect broad participation and a healthy rally. Stocks struggle to celebrate blowout quarters if future growth prospects are not bright. Elevated expectations bar could leave stocks & the economy victims of their own success.

[PLUS] Weekly Observations & One Chart for the Weekend

April 30, 2021
JC Parets

From the desk of Willie Delwiche.

The new high list on any given day has been unremarkable of late. So far in 2021, the most S&P 500 stocks making new highs on any given day has been 135 (27% of the index). The average for 2021 is closer to 50. Despite these lackluster daily readings more than half of the stocks in the S&P 500 have made new highs at some point in the past two weeks. Continued expansion in the number of stocks that have been making new highs reflects healthy broad market support.

Breadth Thrusts & Bread Crusts: A Cup of Coffee Offers Context

April 29, 2021
JC Parets

From the desk of Willie Delwiche.

My grandfather always wanted to drive the length of the Alaska Highway. 

One summer, when he and my grandmother were approaching 70, Paul & Doris bought a Ford diesel pick-up truck, installed a camper in the bed, and headed West from their suburban Washington, DC home in pursuit of adventure.

They made the journey in one piece. It was, by all accounts, the trip of a lifetime. I have a photo from that trip that I just love. It's the two of them sitting on a log with a lake in the background, surrounded by the Alaskan summer in all its glory. They are vibrant, robust and full of life.