Do you see something else here?
Massive tops? Check.
Lower lows? Check.
Lower Highs? Check. [Read more…]
Bearish or Bullish: What Systemic Risk?
On the this episode of Bearish or Bullish we talk about the Crypto Crash and how when Futures opened up on Sunday, they didn’t care. Stocks were actually up a little. That’s the market signaling to us that there is no systemic risk right now in Crypto. And we’re not even close.
That’s probably a good thing, and more bullish for the Crypto space considering how much larger it would need to get to really become intertwined with Stocks and Bonds, which combined are over $150T in market cap. Crypto is only 1.6T, just to put things in perspective.
We also discuss the latest Minor Leaguers Report which scouts the farm system for Small-cap stocks between $1-2B in market cap before they get called up to the Mid-caps ($2B+)
Relative strength in Bonds and European Banks. But is that sustainable? What should we expect?
All this and why Chardonnay is the world’s most versatile grape on the latest Episode of Bearish Or Bullish.
Enjoy!
[Plus] Weekly Town Hall Meeting w/ Willie Delwiche & JC Parets
This is the video recording of the May 27th Town Hall Meeting w/ Willie Delwiche & JC Parets
05/27/21 2PM ET [Read more…]
Breadth Thrusts & Bread Crusts: Wall Street is Stuck in the Past
From the desk of Willie Delwiche.
Wall Street is a trend following machine.
We all know the universal disclaimer: past performance being no guarantee of future results.
But what has worked recently always gets a ton of attention from Wall Street. And for the past decade, buying and holding US large-cap stocks has worked.
If you’ve benefited from that trend, you deserve congratulations. Deviating from the principles of diversification and putting all your investment eggs in that one basket has increased your return and reduced volatility. To some extent, the worse your behavior (relative to theory), the greater your reward.
There is plenty of historical data that says that was not supposed to happen. But it did. Price is price, and we don’t argue with it. Lived experience takes place in the space between theory and anecdote. That is where most actual investment decisions take place as well.
But we can only celebrate the last victory for so long before getting ready for the next game.
Mystery Chart (05-27-2021)
From the desk of Steven Strazza @Sstrazza
Check out our latest Mystery Chart!
What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.
This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.
It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!
The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.
While you can try to guess the chart, the point is to make a decision…
So let us know what it is… Buy, Sell, or Do Nothing?
2 To 100 Club (05-26-2021)
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.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table you will notice we are only focused on technology and growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc
Then like any good technician, we filter the list down to those that are closest to new 52-week highs. This allows the cream of these strongest groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
[PLUS] Weekly Macro Perspectives – Housing Market Facing A Curveball
- Housing market activity restrained by supply imbalances
- Surging demand and lack of supply sends home prices to record levels
- Buyers becoming price-sensitive and home buying plans plummet
I’ll start by acknowledging more questions than answers on this subject. But that itself is part of the point. The housing market was one of the earliest parts of the economy to bounce back last year, but activity in recent months has been more uneven. Existing home sales in April unexpectedly fell (and are at their lowest level since June) and new home sales fell more than expected last month and data for the preceding month was revised lower. There is evidence that supply constraints (in terms of both current housing stock as well as workers and supplies necessary to build additional units) are weighing on activity. But when something as diverse and complex as the national housing market gets wrapped up in a narrative that is almost universally endorsed, I get more than a little skeptical.
Short The Small-caps
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