It's that time of the year again. This is when we hear things like the "January Effect", the "First 5 Days of the Year Indicator", "Santa Claus Rally", "January Barometer" and all sorts of seasonal-type conversations.

Remember, we're right in the heart of "The Best 3 Month Period of the Year". You always hear, "Sell in May and Go Away", but as we pointed out on Nov 6th, it's waaaay more important to "Remember to Buy in November", or "Buy in October and Get Yourself Sober". Either one of those works.

Wall Streeters have all kinds of silly sayings to help remember important things. "The trend is your friend", "Don't fight the Fed", and "Bottom Fishing Can Be Hazardous To Your Wealth" are all good ones that you've probably heard before.

Today I want to talk about the significance of the Santa Claus Rally, and the fact that it might not even come at all. And that in and of itself would be the signal.

Let me explain.

This week Howard and I discuss what "Technology" actually means. With companies like Google, Amazon and Facebook representing ZERO PERCENT of the Technology Index, people continue to group them into Tech regardless.

Is that right? Should we ignore Dow Jones and their weightings? Or is it important to acknowledge which stocks are in these indexes and which ones aren't?

When asked about underperformance from Europe and Emerging Markets, Howard says "I filter the world to only see what's working. I'm all about investing for profit and joy, not misery and pain"

This was a fun chat.

Here's the video in full:

This is the video recording of the December 2020 Conference Call.

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

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 in order to profit in the weeks and months ahead.

We continue to pound the table on leadership down the market-cap scale. There's been strong evidence over the past few weeks/months suggesting this is a structural trend reversal in the large vs small-cap ratio.

From the desk of Steve Strazza @Sstrazza

Last week's Mystery Chart was the Uranium ETF $URA zoomed all the way out to its inception and inverted.

I really hate to do that to you guys, but someone actually guessed it!

More importantly, though, most of you were selling the chart... so buying the Uranium ETF. Yes, you heard that right... buying Uranium.

In this post, we analyze a handful of other rarely covered and lesser-known risk-assets - but first, let's look at Uranium.

For months now, we've been pointing to the fact that metals are doing great. It's just that Gold isn't one of them.

Base metals are where the smart money has been flowing. Copper has been hitting the highest levels since 2013 and absolutely embarrassing the performance of its precious metals counterpart, Gold which has not been so golden.

Copper outperforming Gold is consistent with higher Interest Rates, and we've been getting those too.

More specific to Base Metals on an absolute basis, the positive correlation with Emerging Market Stocks is off the charts. Here is Iron Ore making new 7-year highs overlaid with the Emerging Markets Index so you can see how closely they trade together:

From the desk of Steve Strazza @Sstrazza 

We just published our brand new, revised and expanded, breadth chartbook. Premium Members can check it out here.

We had over 250 charts in our internal chartbook, but cut it down to about half of that so it's not a marathon to get through.

We cover breadth indicators from percent overbought/oversold to new highs and lows, A/D lines, and more. We do this for all the major averages as well as sector indexes.

After digging through all these charts, we'd be remiss not to share some of our favorites with you. We'll go over some in this post.

I was going through the Global Fund Manager Survey this week and thought this one stood out the most.

Remember, this survey is loaded with all kinds of stuff. So there's something for everyone to cherry pick to fit their narrative.

But this one would catch my eye, regardless of my thoughts on the trend of the market.

We're looking at the percentage of investors who say they're overweight on cash at any given time, all the way back to 2001. But what it's really showing is that a net percentage of investors are actually underweight cash.

From the desk of Louis Sykes @haumicharts

Monday was the big day, I had my first CMT exam.

It's one thing stacking up all the topics you need to learn for the test, but it's another to take on lasting knowledge that'll carry you for the years ahead.

Shooting through the textbooks and lectures reinforced that despite all the charts I go through, the process I use represents only a very small proportion of the way people interpret technical data. Seriously, there were dozens of indicators, ways to plot price, and even basic assumptions on why we do technical analysis that I had never come across.

This was all so great to learn.

While I might not use these tools on a day-to-day basis, understanding how people look at markets differently and expanding my knowledge and skills can only be a strength.

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.

The Energy sector has had some interesting moves in both directions in 2020.

Sell off with everything else in March. Hard bounce with everything else in the Spring. Then a slowly accelerating slide into mid October where it caught another bounce.

But what's notable to me is that the down move which ended in October did not undercut the March lows, and the current recovery seems to be running out of steam below the June highs. Feels to me that Energy, and it's $XLE sector ETF is consolidating. 

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 December 21st 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: