From the desk of Willie Delwiche.

March in Wisconsin (especially here in Milwaukee close to Lake Michigan) is a season of it being already and also not yet Spring. Depending on whether the wind is blowing out of the warm Southwest or coming at us right off of the lake, temperatures can swing dramatically. But the consistent warmth of the Sun heats the Earth and gets the soil ready for planting.

It’s one of the most exciting times of the year for me, full of promise & expectation. I’ve already been at work in the garden (the areas, that is, that are already receiving enough sunlight to soften the dirt). One of several changes in my life over the past year was last Fall’s rebuilding & re-arranging of the raised beds in our backyard. I’m excited by the new layout but it means more work getting them ready for planting. The beds are pretty barren at this point. Rhubarb and horseradish will soon provide some evidence of life, and I tried to work around the asparagus, so hopefully that survived. Garlic, unfortunately, did not get planted.

This is the video recording of the March 25th Town Hall Meeting w/ Willie Delwiche & JC Parets

03/25/21 2PM ET

There are times to make money in the market and then there are times to keep your money.

In sports you play offense and you play defense.

Offense sells tickets, but defense wins championships.

That's how I learned it.

Markets across the globe have been taking a breather as the momentum cools off. Taking a closer look back home, the indices have been largely choppy and have consolidated over the past two months.

Is this merely a consolidation? Or are we looking at a minor correction ahead? Let's take a look at what the charts have to say.

In our Three Charts for the Week post, we talked about the resistance Nifty had been facing at 15,400 and also highlighted the crucial support at 14,460. We noticed a divergence in Nifty in January and that has continued to play out as the rally progressed. Within the current setup, the price hasn't been able to move past the 15,400 mark, in addition to now challenging the support level of 14,460.

A breach of 14,460 will lead to a lower high lower low formation on the daily chart, indicating an interim correction in the ongoing bull rally. The next level to track would then be 13,650, which is the next swing low. Up until now, the market has been largely messy...

This is what corrections look like.

When Consumer Staples bottomed out on March 1st relative to the rest of the market, that was one of the first signs of defensive rotation.

At the time, we chalked it up as just one signal, of many that we monitor.

But as the month has progressed, the soldiers continue to fall.

Aussie/Yen has rolled over and we're even getting a bid in US Treasury Bonds:

From the desk of Willie Delwiche.

Key Takeaways:

• Even with stimulus, the economy on a bumpy road
• Bottlenecks testing the resiliency of recovery
• Despite stress points, growth heading in a favorable direction

Apparently, there is a ship stuck in the Suez canal. Pictures show the “Ever Given” container ship turned sideways in the narrow waterway, with its bow wedged on one bank and its stern close to the other bank. This ship, according to the Wall Street Journal, is one of the largest in the world. It’s 400 meters long (longer than the Empire State Building is tall) and can normally move 20,000 containers. In the current situation not only is it not moving its 20,000 containers but has ground to a halt all traffic in both directions in one of the world’s busiest waterways. On average, 55,000 containers travel through the canal on a daily basis, in addition to numerous ships carrying oil and liquified natural gas. The goods are there, but they are not moving.

...

We've seen quite a move lower in $TLT (which moves inversely to interest rates) since this summer.

Is the bottom in?

My crystal balls says: "Don't ask me stupid questions." So, that's no help.

But here's what I know:

• Implied volatility priced into $TLT options is relatively high, though declining from recent high levels.
• We have a clearly defined level (of perhaps temporary) support at $133.
• High volatility gives us the ability to short options and gives us plenty of room to be wrong and still make money.

The bet I'm making is $TLT is going to chop around in a bit of a range over the next 2-6 weeks and this will cause volatility to contract.

So here's how I'm going to play it:

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.

We continue to reiterate the same themes and pillars that support our bullish macro thesis. This would include an abundance of evidence pointing to risk appetite, rising developed market yields, strength from commodities, and of course the ongoing rotation toward cyclicals, value, and international stocks, among others...

Just about anywhere we look, we're seeing investors gravitate further and further out on the risk spectrum.

At the same time, some of the former market leaders have retreated since February and are currently hovering near key levels. Similarly, even the markets' more recent leaders have shown signs of weakness the past few weeks as some have violated critical tactical levels while others are consolidating at logical levels...

Bear Markets are environments where a majority of stocks are falling in price for a prolonged period of time.

Sometimes you'll hear lies about a 20% decline defining such things, but that's just bullshit.

The number 20 is a completely arbitrary number that has absolutely no meaning. Thinking it does is foolish. Why 20? Why not 19.5? or 20.2?

There is no reason. They're just lies.

If you ever hear anyone say that, "A bear market is when it falls 20%", you know it's because they're in the entertainment business, not in the truth business.

Stay away from those kinds of people. They're not here to help.

It's their job to distract, it's our job to ignore.

In reality, expansions in the new low lists are things you’ll find near the beginning of market declines. You’ll see spikes in these lists that haven’t been seen in years.

Here's what this looks like coming into the week. It's still a ghost town:

From the desk of Willie Delwiche.

Key takeaway: After a healthy unwind over the past few weeks that allowed sentiment to reset to neutral, we are seeing optimism rebuild. This uptick in optimism has been accompanied by (as we show in our chart of the week) another breadth thrust. There is room for a further expansion in optimism before it becomes an excessive headwind - and continued broad market strength diminishes such a signal in any event. The combination of breadth thrusts and persistently elevated optimism is reminiscent of the late-2016 to early-2018 period. Then, equity ETFs saw 20 consecutive months of in-flows - we are currently in our 10th consecutive month of inflows (although the pace is quickening, with a record $100 billion over the past four weeks). Equities ran into trouble in early 2018 when breadth thrust tailwinds subsided but elevated optimism remained.

Sentiment Chart of the Week: Another Breadth Thrust 

...

We don't need to make a whole thing about it. But I did just want to take a moment to thank everyone for the last 10 years.

I wrote my first blog post on this site in March of 2011. That was 10 years ago this month.

It’s been a pretty unbelievable ride ever since.

I don’t even know where to start. Hopefully one day I can write a book about it and tell you the whole story.

There are so many people to thank that we’d be here forever.

How often have we heard that sector rotation is the lifeblood of a bull market? Too often! And there's a reason why it's necessary to repeat this statement. At different stages of a cycle, varied variables are at play. This means that every sector will not move in a uniform manner.

Over the past three months, IT has been consolidating as other sectors took the lead. With sector rotation at play, it seems like IT is back in the mix.

Let's take a look at what IT is doing relative to Nifty 100. After breaking out of an almost 12-year base, Nifty IT has been holding on to the high levels displaying inherent strength. Bouncing off its support the ratio chart favours a positive move in this index going forward.

Click on chart to enlarge view.

Now let’s take a look at some actionable ideas at current levels that look attractive on the long side for the next few weeks and months.

TCS is hovering close to its resistance and looks good for another leg of the rally. The price is back above the crucial level of 3...

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

The same strong rotational currents that have been in place in the US since last summer have finally begun to spill over to International stocks... but, not all of them.

For the first time in about a decade, evidence suggests that stock markets around the world have finally built a strong foundation relative to their US counterparts, and might just be ready for a sustained period of outperformance.

How big the move will be and how long it will last are always some of the most difficult variables to predict. We can merely position ourselves accordingly based on the information we do have, and then be keenly aware of new data points as they come in, and constantly re-evaluate and adjust our outlook as appropriate.

As for the potential structural bull-to-bear reversal in the long-running trend of outperformance from US stocks... the seeds have definitely been planted for such a development to occur.

Now, we can only sit...

In the latest episode of The Money Game, Phil and I talk about the old cliché, 'Everything happens for a reason'.

It's funny because it doesn't. Not everything happens for a reason. What's the reason?

It's hard for humans to accept the element of randomness. Sure, good things can happen after a tough breakup or losing your job. Like you can meet your future wife or start a successful business, all after what seemed like a negative event in your life. But connecting the 2 dots is silly.

Now, it's perfectly natural for us as humans to want to do that, but it doesn't make it right.

We inherently want to learn, and how I see, the best ways to learn are from experiences. Some of the most important lessons I've learned came the hard way, for sure. And I can think back to those moments and I'm now thankful for them. But they certainly didn't happen specifically so I could use that information to my advantage today. They were just events that happened, that fortunately I learned from.

I think to believe that...

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ended March 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.

The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us...

From the desk of Willie Delwiche.

Key Takeaway: Small-caps hit pause but remain market leaders. Another breadth thrust shows rally participation remains robust. Bond yields are digesting recent rise, but the path of least resistance remains higher.

The Technology sector continued its descent toward the bottom of the relative strength rankings. It dropped to its lowest ranking since mid-2016 and fell out of the sector leadership group (which based on a three-week smoothing of the current ranking) for the first time in two years. Technology is joined in the cellar by Utilities, Consumer Staples and Consumer Discretionary. Cyclical value leadership remains intact. Even though small-cap groups led the way lower last week, our industry-group rankings continue to show leadership from small-caps and mid-caps.     

All Star Charts recently published a bullish report on the communications space. We're seeing strength in this sector not just in the U.S., but around the world.

One of the names that most interested me has some international flavor.