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[PLUS] Weekly Momentum Report

March 21, 2021
JC Parets

From the desk of Steve Strazza 

Don't miss this weeks Momentum Report; our weekly summation of all the major indexes at a Macro, International, Sector and Industry Group level. As a reminder, we analyze this shorter-term data within the context of the structural trends at play.

 

[PLUS] Weekly Observations & One Chart for the Weekend

March 19, 2021
JC Parets

From the desk of Willie Delwiche.

The recent uptick in US Treasury yields has not been confirmed by other areas of the bond market (specifically Bunds & JGBs). Bonds at this point are extremely oversold and sentiment indicators are pointing to excessive pessimism. The caveat is that bonds are in a bear market and so this sort of behavior should not come as a surprise. Still, there may be some room for yields to consolidate or even pullback from here. If that happens, it could provide a chance for gold to gain some traction. Gold & bonds have moved similarly in recent years, though gold has started to firm up even as bonds sold off this week. What sort of retracement of their recent weakness either bonds or gold can achieve remains to be seen - but an opportunity for that may be emerging.

 

Breadth Thrusts & Bread Crusts: A "Spaghetti Western" Market Perspective

March 19, 2021
JC Parets

From the desk of Willie Delwiche.

Earlier this week JC referenced the 1966 Western “The Good, the Bad, and the Ugly”. Labelled a “Spaghetti Western” because it was directed by Italian director Sergio Leone, the movie and the genre overall have become cultural icons. Little did JC know that I had just watched this movie with my son within the past week (much the way that I had watched it with my father when I was growing up). Beyond just seeing the market metaphor in the movie’s title, the reference had the movie’s theme music again ringing in my ears. 

It’s been a volatile week from a sector level performance perspective, but this is still how I am looking at the market:

[PLUS] Weekly Top 10 Report

March 19, 2021
Steve Strazza

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.

How Dangerous Are These Divergences?

Let’s play a little devil’s advocate. Do you know what a common characteristic of market tops is? Failed breakouts. We see them everywhere at significant peaks - just look back to February of last year, there were plenty of textbook examples. The Russell 2000 just printed a failed breakout and confirmed a bearish momentum divergence as price sliced below its February highs. Making matters worse, RSI couldn’t even register an overbought reading with the most recent highs.

[PLUS] Weekly Macro Perspectives - Commodities Signal Strength

March 17, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaways:

  • Commodities prices are encouraging sign of growth rather than troublesome indicator of inflation
  • Despite hiccups global economic recovery gains traction
  • Bonds could test Fed’s willingness to let economy run hot

Rising commodity prices are getting plenty of attention right now, with most of the focus being the inflationary impacts of these recent moves. For context, the CRB commodity index was hitting two-decade lows this time last year as economic uncertainty spiked amid COVID-related shutdowns. Now, with fiscal stimulus providing liquidity and the Fed hoping for the opportunity to let the economy run hot, commodities across the board have broken out to new multi-year highs. Copper bottomed in March 2020, completing a 40% decline from its early 2018 peak (and matching its 2016 low). It has since doubled, reaching its highest level since 2011. Oil prices are back to where they peaked in 2019 and lumber prices are three times higher than they were a year ago.

[PLUS] Weekly Sentiment Report

March 16, 2021
JC Parets

From the desk of Willie Delwiche.

Key takeaway: Investor optimism has been unwinding even as indexes have moved into record territory and breadth remains strong (NYSE new high list at its highest level since 2004). This week’s featured chart shows the spread between institutional and individual sentiment collapsing. This has tended to occur ahead of market strength, not weakness. While the risks from a strategic positioning perspective are undiminished (especially in the context of valuations and household equity exposure), the short-term and intermediate-term sentiment picture has improved in recent weeks as optimism has come off the boil. It looks to me like investor sentiment has moved off of the risk side of the scale and the weight of the evidence is turning more constructive not more cautious.

Sentiment Chart of the Week: Sentiment Spread, II less AAII

[PLUS] Weekly Market Notes & Breadth Trends

March 15, 2021
JC Parets

From the desk of Willie Delwiche.

Key Takeaway: New high lists are expanding, yet investors are turning more cautious. Weight of the evidence favors focusing on opportunity over risk. Commodity market strength encouraging development for economy and investors. Rotation to cyclical leadership has just begun.

[PLUS] Weekly Momentum Report

March 14, 2021
JC Parets

From the desk of Steve Strazza 

Don't miss this weeks Momentum Report; our weekly summation of all the major indexes at a Macro, International, Sector and Industry Group level. As a reminder, we analyze this shorter-term data within the context of the structural trends at play.

 

[PLUS] Weekly Observations & One Chart for the Weekend

March 12, 2021
JC Parets

From the desk of Willie Delwiche.

Treasury yields have resumed their upward ascent and the 10-year T-Note yield appears poised to move toward 2.0%. I saw a study this week from Joe Kalish of NDR that suggested such a move would put further downward pressure on the NASDAQ 100 (to the tune of a 20% peak-to-trough decline). Joe’s analysis tends to be pretty astute, so it’s something to think about even if you don’t come to the same conclusion. Another thing to keep an eye on: if these new highs in Treasury yields are going to be sustained, the yields around the world are likely going to echo the move in the US. Right now, yields in both Germany and Japan are shy of their late-February peaks (0.17% for the JGB and -0.26% for the Bund).

[PLUS] Weekly Top 10 Report

March 12, 2021
Steve Strazza

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.

1. Dow Averages Take The Driver Seat

At the index level, the Large-Cap Growth-heavy Nasdaq has felt the burden of the last month’s selling pressure. In fact, all other major indices in the US have generated positive returns over the last month. The Nasdaq is the one negative standout. It’s not that we’re seeing money flow out of stocks. Instead, we’re seeing money rotate between stocks.