We held our March Monthly Strategy Session Monday night. Premium Members can access and rewatch it here.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
In today's post, we're talking about a group of stocks that have emerged as the 'Generals' of the current bull market.
You are thinking, “it must be tech.”
It’s not.
Industrials have been just as strong as tech stocks but with far better internals. No other sector has experienced the kind of broad participation we’re seeing from industrials. These are the real market leaders.
Historically, the Industrial sector is the one with the highest correlation to the overall market. So, the strength of these stocks is also sending us very bullish information about the health of this bull market.
This is great news, but today’s note is about looking under the hood and finding the best opportunities in the various industrial subgroups.
As one of the most diverse sectors, investors have plenty of options in the world of industrials. We did the work and dug into this space to find out what the strongest areas are and where we want to put our money.
Let’s get into it.
Here’s the Large-Cap Industrial Sector $XLI breaking out of a multi-year base:
For a healthy and sustainable bull cycle to take place, we eventually need these laggards to participate.
For the 2021 and 2022 bear, speculative growth was the poster child.
We’re talking about biotech, the ARK funds, the IPO index, online retailers, etc. These groups were absolutely decimated.
Not only did they experience some of the worst bear market drawdowns, but in 2023, when new leaders emerged, and many areas of the market began to move higher, these laggards continued to struggle.
Fast forward to today, and these groups are still repairing the technical damage from the prior cycle. With that said, the seeds have been planted for some epic bearish-to-bullish trend reversals.
We held our February Monthly Strategy Session last week. ASC Premium Members can click here to watch the replay and download the chartbook.
Non-members can get a quick recap of the call simply by reading this post each month.
By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.
This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.
With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.
As we exit the best three-month period for the stock market, we're looking to our risk appetite indicators to help us determine the next directional move.
The charts below are all excellent tools for helping identify what kind of environment we are in.
During bull markets, investors embrace risk. In bear markets, they reduce their risk.
Understanding and analyzing the balance between defensive and offensive assets helps keep us on the right side of the trend.
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
This is one of our favorite bottom-up scans: Follow the Flow.
In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.
We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.
Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.
When we talk about market bellwethers, we are referring to large-cap equities that indicate the broader market's future direction.
These stocks often have a heavy weighting in the most important sectors and indexes, as well as a notable economic impact due to their size and influence.
The world's largest bank and financial institution, JPMorgan Chase $JPM checks all these boxes and more.
For that reason, we treat JPM as an index itself. Basically, as JPMorgan goes, the market goes.
From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts
Breadth is expanding to a growing list of sectors and industry groups as the current bull market continues to broaden in scope and participation.
Naturally, this phenomenon is not limited to the US. We’re also seeing more and more countries and regions around the world join in on the party.
As the dominance from mega-cap growth fades, and cyclical and value stocks assume leadership roles, the stage is finally set for international outperformance.
In fact, despite how good US stocks were in 2023, they were not the best.
Today, we’re going to talk about Latin America. They were last year’s global leader, and we think the region is poised for more outperformance in the future.
First, with all the buzz about US stocks this past year, you’d think they were the leader. They weren’t.
Here is a 2023 performance chart of international indexes by region:
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
This is one of our favorite bottom-up scans: Follow the Flow.
In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.
We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.
Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
This is one of our favorite bottom-up scans: Follow the Flow.
In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.
We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.
Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.
