This week on the podcast, Jonathan Krinsky joins me for a chat about Sector Rotation. While the Mega-cap names like Apple, Google, Facebook, Amazon and Microsoft grinded sideways, or even down, since August, the Small-caps, Mid-caps and Micro-cap names have been the leaders. What happens if the Mega-caps break out of these bases to new all-time highs? Does the sector rotation continue? Or do we then rotate into the more defensive areas like Staples, Utilities and REITs, which currently keep making new relative lows?

Where does the US Dollar fit into all this? Will a Dollar rally bust the party and end the rotation into International equities and Commodities? We discussed all of this and so much more in a very short period of time. Jonathan Krinsky is the Chief Market Technician at Bay Crest Partners and puts out research for many long/short equity fund managers. He's a CMT like me and we've known each other for many...

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Monday February 1st @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Monday evening:

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

Last week's Mystery Chart was the Israeli Tel Aviv 125 Index zoomed all the way back to the start of this century.

You might be wondering why we're discussing Israeli equities of all things...

The short answer: They're making new all-time highs.

In this post, we explore the sector that is mainly responsible for these gains, dive into its strongest components, and outline some long ideas with risk/reward setups skewed in our favor.

Not only is this yet another group of stocks we can use to express our bullish thesis on risk assets -- it is also excellent information. Once again, we're seeing another development pointing to the increasing participation and improving breadth across international equity markets.

This move in Israeli equities also fits into a larger theme that is taking place beneath the surface for stocks all around the world. It's difficult to overstate the significance of these moves.

In short, we believe this is one of the...

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.

As we discussed in last week's report, bears have a lot of work cut out for them.

With all this rotation into offensive groups and cyclical areas of the market, they are really running out of talking points. We literally can't find a meaningful group of stocks in the US or even abroad that we would want to short at this point.

This is excellent information as it's not something we can say very often... and it's bullish, just to be clear.

The move higher in equities is being supported by significant cap-rotation at the index level as well as broad participation among sectors, and most recently, even international stock markets.

Basically, it's hard to find stocks that...

I'm getting trolled more than I have in a long time. It's almost like people are mad at me for being as bullish of equities as we've been, and continue to be...

What's everyone so angry about? I don't understand.

Anyway, yes there are stocks we want to buy. Can some stocks go down? Sure. Does that change the fact that there are stocks we want to buy or own? No.

As far as potential headwinds for stocks go, I've got 3 pretty simple ones today.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending January 25, 2021. As a reminder, this column will be published bi-weekly moving forward, and rotated on-and-off with our new Minor Leaguers column.

In this column, we 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...

The latest E-Trade StreetWise survey, which is put out quarterly, revealed most investors (66%) believe the market is in bubble territory, and another 25% think it’s approaching one.

Check my math, but that's over 90% of investors thinking we're in or near a bubble.

A bubble!

Everything needs to be a bubble.

You see why we can't have nice things?

I mean, what ever happened to a series of higher lows and higher highs defining an uptrend?

Too simple?

Not intellectual enough for you?

Fine. Let's get into facts.

The Dow Jones Industrial Avg and Dow Jones Transportation Avg did nothing for almost 3 years, and just broke out in the 4th quarter last year. Is this a bubble? Or just the beginning of a new uptrend?

One of the main themes we've been hitting on in the past few months/quarters is the aggressive shift in leadership down the market cap scale.

When we take a step back, this all jives with what we're seeing in other asset classes as investors are rushing into risk assets as they position themselves more offensively.

This development really began last March as the market was bottoming from its swift Q1 selloff.  Although the relative trend really accelerated in early September as Mid, Small, and Micro-Caps began to drastically outperform their Large-Cap peers.

Let's take a look at how this cap-rotation has impacted some of the secular leaders at a sector and industry level.

What would it take to finally end the long-term bear market in commodities?

How about Crude Oil Futures trading below zero?

Yes, remember when Oil traded in the negatives last year?

This is something most of us never thought was possible. If you had this on your list of possibilities, kudos to you I guess.

I didn't.

Chatting with the team this morning, something that stuck out and we all agreed on is that the Megacaps are starting to show signs of re-asserting their dominance. And that it won't be a one-day event. Just look at NFLX, MSFT, AAPL, and the like and you'll likely see what we're seeing.

And the stock that stands out the most to us right now is Google $GOOG.

Check out this chart:

This is the video recording of the January 2021 Conference Call.

From the desk of Louis Sykes @haumicharts

This is an issue that pretty much everyone encounters at some time or another...

Overcomplicating correlations.

I'm going to share a few recent examples, and then discuss how overthinking these relationships could potentially end in a world of hurt.