In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Stocks Test September Highs
The Dow Jones Industrial Average and the Dow Jones Transportation Average are both struggling at key Fibonacci extension levels from their 2018 drawdowns. Mid-caps and bank stocks are trapped back beneath key levels of overhead supply at their first-half highs. And the small-cap Russell 2000 is trading back toward the lower bounds of its year-to-date range. The majority of stocks are simply consolidating in holding patterns right now.
When we zoom in on the S&P 500, as we’ve done in the chart below, the importance of the September highs is hard to ignore. In November, price rallied to the first extension level from its fall drawdown. In the few weeks since, the index has retreated straight back to its prior peak near 4,540. For now, buyers are digging in and defending these pivot highs. Bulls need this level to hold if stocks are going to stop the bleeding and carve out a...
Check out this week's Momentum Report, our weekly summation of all the major indexes at a macro, international, sector, and industry group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big-picture context and provides insights regarding the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
Macro Universe
Our macro universe was in the red again this week, as 68% of our list closed lower, with a median return of -0.42%.
Lumber $LB was a massive winner, closing out the week with a gain of more than 18%.
The biggest loser was US 10-Year Yield $TNX, with a weekly loss of -9.38%.
There was an 11% drop in the percentage of assets on our list within 5% of their 52-week highs (currently at 38%).
In a note published on Saturday, we briefly outlined what took place over the weekend, a $700B total market-cap decline that saw most crypto assets fall over 25% on an intraday basis.
As we'll cover in this week's report, we're on the sidelines with elevated cash positions. Risks still linger for long positions right now--we're waiting for a higher-conviction entry.
Here's a quick summary of what took place over the weekend:
This week we’re looking at a long setup in the crowd favourite IT sector. In the week gone by, we saw some strength come through and a particularly interesting breakout too!
We retired our "Five Bull Market Barometers" in mid-July last year 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.
I can't help but notice the similarities between the Bitcoin Crash we just saw and what happened to stocks in 1987.
You guys following me for a while know I'm not big on analogs. Every market environment is different.
But history does help us put together a roadmap. We're all humans in this endeavor after all. And that certainly doesn't change, even if we are talking about Crypto and not stocks, 2021 and not 1987.
For you guys who are new to markets I encourage you to study the past. Learn about prior cycles and what happened.
These are great lessons. I promise you.
The US Stock market was booming in the 1980s, after doing nothing for decades since topping out in the mid-1960s.
Stocks were rolling. They had meme stocks and reddit back then too. They were just called other things like Junk Bonds and Corporate Raiders.
With the volatility experienced over the last 24 hours, we thought we'd provide a quick update on what's taken place, and how we're approaching the market right now.
At its peak, the total crypto market cap lost $700B in a space of less than 24 hours, equating to an aggregate 26% decline. In this same period, over 400,000 traders and $2.5B worth of funds were liquidated, making this the most violent unwind we've seen since the May crash.
Our Hall of Famers list is composed of the 100 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.
The Hall of Famers is simple.
We take our list of 100 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
Here’s this week’s list:
And here’s how we arrived at it:
Filter out any stocks that are below their May 10th high, which is when new 52-week...
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Risk assets are under pressure.
Failed breakouts and significant retracements have materialized across cyclical areas of the market, including the Russell 2000, the energy and financial sectors, and, of course, commodities.
The energy complex has endured the most severe damage in the commodities realm, with crude oil leading the pack lower. Last Friday’s session was a bruiser, with crude dropping $10 to close out the week.
This kind of volatility can be alarming for any investor.