Measured Move Monday - 08/02/2021
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
Many key indexes… both large and small, sit at all-time highs. However, if you are looking for the leaders of the market… you need to look further down the market-cap scale.
Small-, Mid- and Micro-Caps have had every chance to absorb their recent gains, but they continue to grind higher. What an impressive move we are witnessing! This strong upward momentum from these types of stocks speaks to how healthy the risk appetite is within the market.
Will we see a change of guard with Small-, Mid- and Micro-Caps to take a breather here? Maybe? maybe not… Time will tell…
Overall, the weight of the evidence continues to suggest further momentum to the upside and strength within the equity markets.
Let’s have a look at the performance overview for week 5 of 2021
This week’s movers: Micro-Caps, Small-Caps, High Beta & Oil
This week’s losers: Gold
As a sign of broad participation, the S&P 500, Russell 2000, Nasdaq, DJI, EAFE, and Emerging Markets are all at or near new highs.
Over the past few months, the predominant market themes have been Growth and High Beta outperformance vs. Value and Low Volatility.
Internals continue to look healthy. These current breadth levels point to broad-based participation.
Momentum indicators look strong and continue to be within bullish zones.
Sentiment indicators are showing that optimism is on the rise here.
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
Emerging Markets holding above the 2007 peak. Will we see a substantial move higher now? The decade-long downtrend in the Emerging Markets relative to the S&P500 has the appearance of a trend reversal. Will EM take a leadership role moving into 2021?
US
Whatever your cap scale is… you are at daily closing all-time highs!
The equity market's strength can also be seen when comparing it to other asset classes, with S&P 500 is at all-time relative highs vs bonds and 52-week relative highs vs gold. That is strength!
US Sectors
Tech’s strength last week was impressive… check out those weekly candles that close out the week at all-time highs!
US Industries
Rates on the rise… Banks spreads widen... Banks become more profitable... especially with small local banks whose primary focus is on lending.
Fixed Income
Bonds relative to the strongest index in the world have no chance!
Commodities
Gold simply looks unattractive here.
Bonds look worse.
Currencies
Aussie stuck in the middle of two significant price levels. The recent momentum coming off the March 2020 lows has been powerful!
Intermarket
Are people moving their money to areas of the market where their money will receive more love? I think so!
Factor/Style
No other words but…. Small-Cap strength has been impressive!
Breadth
Breadth metrics can persist for longer than you might think.
The percentage of stocks above there 200-day SMA can stay above 80% for a long time… look at the moves after the Dot.com bubble and the Great Financial Crisis… I think we might see some more strength to come!
Themes
In an environment of lower bond prices and higher interest rates, you would expect to see the equity bond proxy to be grinding low… and guess what… they are! This is just another sign for the level risk-appetite we are witnessing within the equity markets.
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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