From the desk of Steve Strazza @Sstrazza

We’ve been vocal about the strong internals supporting the rally in US Equities.

We've pounded the table about one historic breadth reading after the next as they’ve continued to pop up in a variety of the major indexes and sectors since early last summer.

This seemingly constant influx of extreme readings is not something we see very often... if ever.

For example, the NYSE and Nasdaq recently registered the most new highs in history on a combined basis.

The bottom line is breadth has been overwhelmingly bullish and is one of the main reasons we're in the camp that this is likely the early innings of a new cyclical bull market.

Whenever I want to talk about bonds, I always know just who to call. Larry McDonald is a former bond trader at Lehman Brothers and author of the book, Colossal Failure of Common Sense. I highly encourage you to give it a read, especially if you're looking for some perspective on what really happened back in 2007-2008.

It's no coincidence that I reached out to him to come on the podcast. Larry and I had a very timely conversation in February of last year. So with the bond market recently losing 5-6 Trillion dollars in such a short period of time, who better to talk to than by favorite bond trader.

Here we go with our next round of the Top-Down Take post. At All Star Charts, we like to keep things simple and look at the bigger picture. We let the charts speak to us and then decide what to do. Always remember, the Trend is our Friend.

Today we’re taking a look at a sector that has been an outperformer in the recent past despite broader market correction. Nifty Metal is now moving from strength to strength as more constituents break out of long-term bases.

Some of us are old enough to remember a time when Value stocks were the place to be. The kids these days look at me like I'm nuts when I talk to them about banks and energy stocks!

There's a whole world of companies that used to do great. In fact, early in my career these were the names to be in: BTU, WLT, LEH, MER, BSC..... Good times!

Tech and all that other stuff came much later and has been the big driver in the U.S. over the past decade. But the rest of the world has suffered, without that exposure to Tech and Growth, and instead loaded with banks and natural resources, the worse places on earth for some time now.

Fast forward to today and we continue to get more and more evidence suggesting that it's changing.

It's no longer US over International and EM. It's been EM and International over US. It used to be Growth over value for so long.

That's just no longer the case:

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

It's not about a virus or any economic reports. It's about Credit.

We've said it before and we'll say it again.

Look at last year, for example. By the time the S&P500 finally put in its high in February, everything else had already been falling apart. Small-caps, Mid-caps, Micro-caps, Financials, Transportation, Emerging Markets, New Highs list, Advance-Decline Line, the Value Line Index and S&Ps relative to its alternatives had all been pointing to stocks falling.

There was more data early last year suggesting to be completely out of stocks, and in bonds instead, than before any other crash in stock market history. We discussed this last week.

But even if you ignored all of those factors. And you just looked credit, you would have seen Treasuries significantly outperforming the rest of the bond market. Credit told you:

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending February 19, 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.

From the desk of Steve Strazza @sstrazza

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 to profit in the weeks and months ahead.

Every major asset class on Earth continues to illustrate risk-taking behavior on the part of market participants.

Yields, Oil, Equities, Base Metals, the Australian Dollar -- there's an overwhelming amount of new highs in offensive areas of the market right now. The weight of the evidence continues to suggest that we want to be buyers, not sellers, of stocks.

What does the market environment look like if stocks are under pressure, and loading up on stocks is probably a bad idea?

Well, I'd argue we'll probably stop seeing new highs in Aussie Dollar and US 10-yr Yields:

It's hard not to laugh a little when we say ridiculous things like,

Regional Bank Stocks continue to be the market leaders during this Global Pandemic...."

Especially in front of a group of investors who think they're smart.

This is like the "least smart" comment you can make, according to some circles...

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

In a recent post discussing cyclicals, we posed the following question:

Are Energy and Financial stocks about to lead the market?

Cyclical groups are catching all the right tailwinds in this environment.

Crude Oil and Yields are pressing to new 52-week highs as investors continue to favor more economically-sensitive stocks and commodities in general. This is a bullish development and supports higher prices for some of the most beaten-down risk assets... even Financials and Energy.

As participation has expanded, we've been vocal about looking for the winners in each group without a sector bias based on relative strength.

When you really dive in and see what's going on, it becomes quite obvious that this will end in disaster for many investors.

Do you know why?

Because that's what always happens.

So what?

Why is that our problem?

What does that have to do with investing and helping my family?

If you take maybe just 30 seconds to study history, you’ll find that most uptrends were not bubbles. They were just uptrends.

There were things that happened this month and even last year that have never happened in the market before. There were even some events that only occurred a few times in history.

So what?

Every month and every year we see the market do things that it's never done before, or maybe has done very rarely.

If you really want to get into it, we see something happen every single day that rarely happens, if at all.

So what?

We can make a big to-do about it, if that's your modus operandi. Remember it's a lot of people's job to sensationalize everything. Way more people than you think. And in many cases, the ones with the loudest mics.