Macro Monday - 01/18/2021
A brief note on my favourite high-level charts going into next week
I know its a public holiday in the US, but let’s get into some charts and data! Rise and grind baby!!
Ok, so the weight of the evidence continues to lean in favour of the bulls.
The continuation of strength in the small and micro-cap stocks is impressive.
More and more global indices and stocks are making new highs.
Sector rotation and Market-cap rotation is a thing!
Commodities continue to pump higher, have you seen the chart of soybeans?
Here is a performance overview for week 2 of 2021
This week’s movers: Micro & Small-Cap.
This week’s losers: Lumber.
Broad participation continues to be the key theme, High Highs and Higher Lows across the board… it’s that simple!
On a relative basis, Emerging Markets continuing its move since breaking above its relative resistance, while NASDAQ-100 continues to be stuck under resistance.
High-Beta leadership over Low-Volatility continues.
Growth vs Value is trending sideways. It’s a broad bull market. The trend still favours Growth stocks.
Internals continue to look healthy. Just remember these breadth metrics at these high levels can persist a long time. Its a bull market!
10-year US Treasury yield moving above 1%.
Gold throwing up lower highs.
Copper and AUD/JPY at 52-week highs.
The US Dollar trend reversal or just a lower high? Remember, the primary trend is down.
The RTM
The RTM is a current and brief overview of the leaders and laggards throughout the equity market.
Regime: Bullish Regime indicates the 14-day Relative Strength Index reading is between 100-31 and remains until the value is less than 30 and a Bearish Regime indicates the 14-day Relative Strength Index reading is between 0-69 and remains until the value is more than 70
Trend: A positive percentage (coloured green) indicates how far the 50-day moving average is above the 200-day moving average and a negative percentage (coloured red) indicates how far the 50-day moving average is below the 200-day moving average.
Momentum: A positive percentage (coloured green) indicates that the 63-day rate of change is positive, and a negative percentage (coloured red) indicates that the 63-day rate of change is negative.
My proprietary momentum and relative strength ranking system is a numerical score that ranks the S&P 500, 400 and 600 sectors.
These sectors are assigned a score based on twelve key technical indicators covering different timeframes.
Using this report, we can observer the sectors according to their technical rank to identify the leaders and laggards within a specific group.
Sectors that jumped out at me this week:
Strength in S&P600 Real Estate.
Weakness in S&P500 Consumer Disc, S&P500/400 Info Tech, S&400/600 Materials,
I am now moving on to the good stuff… charts! As always, I am going to share my favourite charts from my weekend charting session.
World
Nikkei 225 has broken out of a monster big booty base starting back in 1990. For me, that is a huge bullish development for world equities. The importance of this breakout move cannot be overstated.
Emerging markets look like they are changing their relative trend here, as they made new 52-week highs relative to the US last week.
US
Small-caps have been on a face ripper of a run since breaking above that important 2018 to 2020 resistance level.
Looking deeper in the barrel, you see the same story in Micro-caps.
US Sectors
Financials above 2008 highs! Wowee!! Now that’s bullish.
US Industries
Gold Miners continue its multi-month consolidation which has taken GDX below an important level of support. This breakdown can also be seen relative to the CRB Commodities index. Sellers remain in control. More weakness to come? I think so.
Fixed Income
Inflation expectations continue to rise.
Commodities
Gold looks to be losing its leadership role among the commodities space breaking below a huge support level.
Currencies
The US Dollar/Canadian Dollar cross breaks to fresh 52-week lows after breaking below a key level of support. That means new highs for CAD. So, is the price going to revisit its 2017 lows now? I think so.
Intermarket
Short term trends for gold don’t look good! Can you now hear the gold bugs incoming? Lol!
Factor/Style
For the past few months, I have been saying this relationship has been on the ropes! are we now seeing it breakdown? Will we see leadership from value stocks? I guess we will have to wait and see how both react to this information.
Breadth
Broadening participation and improvements for both short- & long-term trends is hugely bullish for the markets. Don’t be scared of highs!
Themes
Here’s one of my favourite Intermarket charts, and you can see a relationship here. Now, with the U.S. 10-Yr Yield finally getting above 1% and Copper outperforming Gold, this screams we are in an environment with strong risk-appetite, higher inflation expectations, and more substantial economic growth.
That’s a wrap for today, hope you enjoyed my charts, and please don’t forget to share your ideas in the comment section or get in contact with me on Twitter @granthawkridge.
Stay safe and good luck out there…
GH
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