Measured Move Monday - 01/03/2021
A brief note on my favourite charts going into next week
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It’s Monday again…
Let’s rise and grind!
Welcome to Measured Move Monday
This past week we experienced a bit of a selloff on Thursday and Friday.
We need to ask ourselves: was there any damage to the most important assets in the world?…
For me, the primary trend remains higher, these recent developments are more on the shorter-term scale, but we still need to sit up and take notice! Every data point is information that we can use!
There is still upward momentum from the ‘risk on’ areas of the market on the longer-term outlook, which speaks to the level of risk appetite and how healthy the market really is…
Overall, the weight of the evidence for me continues to suggest further momentum to the upside and strength within the equity markets. However, we need to be aware that there could be a shift to a more trendless and choppy market at the Sector and Index level in the coming weeks.
Let’s have a look at the performance overview.
This week’s movers: High Beta & Oil
This week’s losers: Emerging Markets & Utilities
The S&P 500, Russell 2000, Nasdaq, DJI, EAFE, and Emerging Markets are all coming off recent highs.
On a relative basis, Dow Industrials continues to lag. Small-Caps are holding up the best with the recent short term sell-off.
The main theme continues to be that High Beta is outperforming Low Volatility.
On a relative basis, We can see weakness within momentum.
Internals continue to look healthy even in the face of this short term sell-off. These current breadth levels continue to point to broad-based participation.
Momentum indicators are looking to hold their current level to stay within bullish zones.
Sentiment indicators are showing some signs of weakness.
Another week passes with no signs of Intermarket stress during this recent slide in stocks. This suggests that the pullback was more about profit-taking rather than something on a bigger scale.
My proprietary momentum and relative strength ranking system is a numerical score that ranks all sectors and industries.
These sectors & industries are assigned a score based on twelve key technical indicators covering different timeframes.
Using this data, we can observe the sectors according to their technical rank to identify the leaders and laggards within a specific market area.
The Regime, Trend and Moment values also provide you with more data to fine-tune who are the leaders or laggards throughout the markets.
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.
I am now moving on to the good stuff… more charts! Here are my favourite charts from the weekend.
World
Here is the percentage of global indices above their 50-day & 200-day moving averages. They are still within the bullish regions. Unless these readings fall under 40%, I’m not worried.
US
The percentage of Russell 3000 stocks that are more than 20% from their 52-week high is down at 27%, the lowest figure since mid-2018. This is what Broad market participation is about!
US Sectors
Defensive sectors relative to the S&P 500 are at new lows! Risk is still on!
US Industries
Is it time to start looking closely at the Travel, Leisure & Entertainment stocks? Relative strength and positive momentum is the key here.
Fixed Income
Investors are still looking for more risker options.
Commodities
I would definitely say we have seen a change in trend here…
Currencies
While correlations are not perfect, they are significant. Paying attention to what is happening in the commodity market during the next few years might lead you to greater profits. Demand from global growth should continue to push commodity prices higher. Be prepared to take advantage of the currencies that will strengthen as commodity prices increase and the currencies that will weaken.
Intermarket
Global growth in one chart…
Factor/Style
The story of the rotation into value from growth has been a HOT topic on Twitter lately… So, will this be a meaningful breakdown? or a failed breakdown? Time will tell!
Breadth
The internals across the board are healthy. However, this chart of Nasdaq 100 made me sit up in my chair! It’s definitely one to watch during the week.
Themes
Defensive areas of the market are just getting no love! People are chasing their alpha elsewhere… it’s just that simple!
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.
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Stay safe and good luck out there…
GH
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I really like your charts