From the desk of Steve Strazza @Sstrazza

Small-Caps have been outperforming the large-cap indexes by a mile so far this year.

Since January 1st, the S&P Small-Cap 600 is up roughly 25%, compared with just a 5% gain for the S&P 500, and 0% for the Nasdaq 100.

This leadership is showing no signs of slowing, as they once again led the market back to fresh all-time highs this week after a brief and shallow reset.

Not only has the momentum behind this move been astounding, but the S&P Small-Cap 600 just experienced another significant breadth thrust, this time in its percentage of new 52-week highs.

Let's take a quick look at these developments and what they mean for the group going forward.

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

Markets never operate in a static manner. Instead, markets are dynamic and remain in a natural and constant state of flux.

In knowing this, we must always remain flexible and aware of the changing conditions and developments taking place around us. We pride ourselves on our ability to evolve and adapt to these changes in market structure and are never dogmatic in our approach.

For the last decade, US large-cap growth has been where the alpha is, and derivatives of this theme like large over small, stocks over commodities, and US over international have been very powerful relative trends. We know this well because we've been leaning on them for a long time...

But that's all changed recently, as we've been vocal about the importance of repositioning and decreasing exposure to growth in favor of more cyclical, value-oriented stocks.

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

In this week’s Commodity Report, we saw a continuance of many of the same themes that we've been pounding the table on for months now.

Mainly, strength in the procyclical areas of the market like Energy and Base Metals. This fits with what we’re seeing in Equity Markets as the rotation out of Mega-cap growth and into more cyclical sectors takes hold.

However, Crude Oil and Copper aren’t the only Commodities catching a bid right now. We’re also seeing strength in the grain markets. 

One of the charts that caught our attention this week was Palm Oil Futures.

Palm Oil is one of the most important Commodities in Asia and combined with Soybean Oil it accounts for roughly 63% of the global production of vegetable oils. Its uses vary from cooking and producing processed foods to personal care products like soaps and fragrances. It also plays a key role as feedstock for biofuel production.

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

From the desk of Steve Strazza @sstrazza and Ian Culley @ianculley

Check out our latest Mystery Chart!

What we do here is take a chart that's captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it's an absolute price chart, other times it's on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren't able to recognize what's in front of us, we put aside any biases we may have and scrutinize it objectively.

While you can try to guess the chart, the point is to make a decision...

So let us know what it is… Buy, Sell, or Do Nothing?

The Biotech space has seen a lot of price action in both directions over the past several months. As such, there is no surprise that options premiums in that corner of the market have become a bit elevated.

There's a setup I've spotted that offers us a good opportunity to fade these premiums as the sector pauses to digest recent activity.

From the desk of Steve Strazza @Sstrazza

Last week's mystery chart was a popular one, so we inverted it to make things a bit more challenging. Someone still guessed it... Nice work.

It was the iShares 7-10 Year Treasury Bond ETF $IEF. The issue with inverting Bond charts is that when you do they look identical to yields. In the case of IEF, we're basically dealing with the US 10-Year Yield $TNX.

Rising rates has been one of the main themes early this year as developed market yields have accelerated higher and hit the pockets of bond investors all over the world.

In this post, we'll check in on some of the most important and most telling credit instruments on both absolute and relative terms in order to piece together the message the bond market is sending investors.

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 March 15th 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:

From the desk of Willie Delwiche.

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.

Rotation into value is dominating the narrative right now as money continues to pour out of the former leaders and into long-term secular laggards like Financials and Energy.

In line with this trend, we continue to focus less on US Large-Caps and Growth, and instead look for opportunities in SMIDs, Cyclicals, and International stocks.

So here's the question, with the inevitable mean reversion for growth and tech, will you take that opportunity to lighten up on any growth & tech you have left to buy more value?

Or will you double down on the growth and ignore value stocks?

From the desk of Steve Strazza @Sstrazza

Dividend aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to longer-term minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for 5-9 years.

Introducing the Young Aristocrats. We like to say these are “stocks that pay you to make money”. Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.