Welcome back to our latest Under the Hood column, where we'll cover all the action for the week ended March 4, 2022. This report is published biweekly and rotated with our Minor Leaguers column.
What we do here 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.
Not many people know this, but I used to be a gold bug way back in the day.
Mid-2000s and into the financial crisis and beyond?
I was Mr. Gold Bug.
Any good technician was. That's how price told us to behave.
But then a funny thing happened. A combination of price and common sense proved that being a gold bug was no longer a good idea. That was about a decade ago.
And you know how humans are. Many of those angry little buggers stuck around and held other people's bags this entire time, while stocks and other risk assets have ripped making everyone rich, except for gold bugs.
It's funny how life works.
Because I think we might be back.
It's hard not to be in the Rocks > Stocks club these days.
We held our March Monthly Strategy Session last Tuesday. Premium Members can click here to review the video recording and download the slide deck.
Non-members can see some highlights from the call by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.
This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
Market experiencing most persistent weakness since Financial Crisis.
Path forward is about finding new opportunities rather than repairing past paradigms.
Energy & Latin America benefitting from Commodity strength.
We are in the midst of the longest stretch of consecutive days of more new lows (NYSE+NASDAQ) than new highs since the financial crisis. While there have been more intense peak-to-trough drawdowns in the popular averages over the past decade and a half (late-2018 and early-2020 come to mind), it is the persistence of the weakness in the current experience that is noteworthy. Whether looked at from a market perspective or a macro perspective, the longer the disruption, the harder it is to just bounce back...
Metals have been gaining more strength with every passing day and have certainly been outperforming the market at present. We have a long setup from the Metals sector this time around as well.
We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.