From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @GrantHawkridge

In recent months, we've seen a rare bid in defensive assets as investors position for more mixed markets and messy action in the weeks and months ahead.

These defensive areas of the market have stopped trending lower on relative terms and many are rebounding off of very logical support levels... Gold Miners and Bonds are two examples of safe-haven assets that we recently got involved with on the long side in order to express this view.

Now add the following developments to the mix:

From the desk of Steve Strazza @sstrazza

As the market has become increasingly mixed, it's time to switch up our strategy a bit.

As we outlined in our post yesterday, for the first time in about a year, we are shorting stocks.

But this statement requires an asterisk...

We are shorting some stocks. And at the same time, we're still buying the leaders as plenty of stocks continue to show impressive strength -- particularly those with cyclical or value characteristics. That's where we're focusing for long ideas.

As for shorts, it's all growth. That is where the weakness is. We're not only seeing deterioration and relative weakness at the index level for growth stocks -- the internals are also deteriorating beneath the surface.

This is simply a tale of two markets. As growth-heavy averages like the Nasdaq roll over, the leadership areas are registering bullish breadth thrusts and carrying on higher like business as usual.

From the desk of Steve Strazza @sstrazza

First of all, thanks to everyone as always for participating in this week's Mystery Chart.

As noted in the Mystery post last week, the rounding bottom in question is a pattern we've become all too familiar with since last year.

The reason for this is simple: The chart was merely a derivative - or just another way to illustrate and visualize the overarching theme that's driving so many of our cross-asset relationships these days... The sustained rotation out of Growth  and into Value.

We've written a lot about this theme since last year, and more recently have been pounding the table on a new theme that's taken the forefront for markets across the globe... We believe we're in for a trendless or rangebound period for risk assets as well as an increasingly bifurcated or mixed market. 

Much of this divergence in performance among various groups can be directly attributed to this trend toward value and away from growth.

We recently had on a counter-trend trade in gold that worked out (we took off the trade at our profit target this week), and we're starting to see a similar rationale and setup in bonds.

I'm going to let Steve Strazza do most of the talking here because he had an excellent riff on this in the latest R.P.P. Report:

From the desk of Willie Delwiche.

You know by the time the journalists get wind that things are good, it's probably almost time for it not to be anymore.

We just saw the best 52-week period for stocks in over 75 years. You know what they were telling you the week that rally started?

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

One of the most frustrating questions plaguing investors at the moment is... "How long will this choppy environment last?"

And one question we’re asking internally is… “What is with all these mixed signals!?”

Once the latter clears itself up, we'll have our answer to the former... But not until then.

When the outlook becomes increasingly murky, the best action is to take a step back, let the smoke clear, and weigh each new piece of evidence as it becomes available.

For now, the most important evidence we have is our list of risk-on commodities and equity indexes testing critical levels of interest grows larger by the day.

There seems to be no end in sight. Complicating matters further, we’re actually seeing this kind of price action throughout the risk asset landscape. It's not isolated to a single asset class or region. We're seeing it in Stocks, Bonds, Commodities, and even Currency Markets... and not just in the US, but also abroad.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest "Under The Hood” column for the week ended May 14, 2021. This column is published bi-weekly and rotated on-and-off with our 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.

From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return 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.

You can consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes as well as discuss the most important themes and developments taking place in markets all around the world.

While the weight of the evidence remains in the bull's favor, we continue to see more data arrive that suggests the environment could be shifting toward one that is less conducive to risk assets, at least over shorter timeframes.

What do you want from me?

Do you want me to tell you that it's just all rainbows and butterflies?

Is that why you come here?

Or is it because you know I don't give a shit, and I'm just going to give it to you straight every time?

So here's the deal.

We had a heck of a run. That was one of the best 1-year returns of all time.

What more do you want?

Give it a rest. Let Year 2 play out and see if it's like all those others. So far it's exactly like them.

We've seen a ton of relative strength out of the Value areas of the market: Financials, Natural Resources, Industrials...

Those are the areas where we've wanted to be as money has rotated out of Growth.

But now our upside objectives are getting hit all over the place. We laid all that out 2 weeks ago in great detail.

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

Lumber futures have been on an absolute tear since last spring. The vertical but volatile price action off last year's lows is something for the history books.

After trading down to 250 in late March of 2020, Lumber has since shot back above 1,600, where it trades today. It’s no wonder social media is full of people flaunting their wealth with stacks of timber. 

But we have to ask... is it time for a pullback? Is this rally overdone here? 

Let’s take a deeper look and discuss why we believe the logical move for Lumber over the short term is sideways... or even lower.

Here’s the chart. Look at that face ripper - up nearly 7x in just over a year!

These are the registration details for our live monthly conference call for Premium Members of All Star Charts.

This month’s Conference Call will be held on Monday May 24th at 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Monday night: