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.

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.

Bitcoin is a market that we are very fond of here at Allstarcharts. You've heard me say it plenty: it's a beautiful case study for Technical Analysis.

It's not a company. There are no fundamentals.

And you guys have watched us analyze the behavior of Bitcoin and other Crypto Currencies since early 2016.

It's been pretty amazing to watch and participate in a new market like this. They were telling us we were late to the party back then. They're still saying the same thing now.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending March 5, 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 Canadian economy is dominated by Financials and has a diverse and abundant exposure to natural resources. Despite the close proximity, the composition of the country's stock market couldn't be more different from that of the US.

They have a much higher relative exposure to areas like Financials, Energy, and Materials... Basically, all the things that are working.

On the other hand, they have significantly lower exposure to areas like Technology, Health Care, and Discretionary... Basically, all the areas that are NOT currently working.

You see, just because you and your crazy friends have way too much U.S. Large-cap Growth exposure, doesn't mean the stock market is in a correction.

Stocks can do very well while Tech and Growth severely underperform.

May I remind you that Tech was the leader early in the recovery back in 2002-2003. And then handed over the baton to everyone else:

It was John Roque who taught me this so many years ago. At least a decade if I had to guess.

We're NOT in a reversion to the mean business. This is a reversion BEYOND the mean business.

In other words, assets don't just get back to what is "average". They tend to overshoot. And that's the norm, not the exception.

This mean reversion we've seen in energy could be just that, a reversion back to the average. But if I've learned anything over the years, these things tend to overshoot.

We've been very vocal about this Value rotation, of course. But coming into the weekend, the big question I pose to myself, my team, and the market for that matter, is this:

Will Energy run into trouble at this logical level? Or will it not care what JC thinks is a logical level?

In our latest post, we highlighted the outperformance of Small-caps over large caps and shared a few ideas that we thought could perform well going forward.

Here is part 2 of the Small-cap actionable ideas. Let's see take a  look at the names that have made the cut!

Nifty Small-cap 100 has been moving past crucial resistances. As can be seen from the chart below, we're tracking 7,850 as the risk management level with 9,650 acting as the next target.

In no market can prices rally without minor corrections, so as long as this index is trading above 7,850, our bullish view remains intact.

Click on chart to enlarge view.

If there is one chart that stands out the most this year, it has to be the Growth vs Value relationship. We've been pounding the table about it for a reason.

We know what's happened over the past couple of weeks. But when you zoom out and see just where it's happening, that's the WOW!

From the desk of Steve Strazza @Sstrazza

I want to elaborate on a big theme of late that's been on my mind. We've written about it, discussed it internally - as well as on Clubhouse, and just this morning JC and Willie were both tweeting about it.

One major implication of the impending trend reversal in growth vs value is its potential effect on passive investment vehicles.

Considering what a mega-trend passive investing has become with the ETF boom over the past decade-plus, this is likely to impact investors far and wide... If they don't reposition themselves appropriately.

The reason for this is nuanced but in my opinion, it boils down to the argument that passive is really just active and there have been significant changes in market structure since the financial crisis that have resulted in the major averages being dominated by just a small handful of stocks.

Small-Caps are now the flavour of the season, or at least of the current market setup. With these stocks outperforming the broader market, we took a look at some stocks that could be actionable trades with good risk-reward ratios.

We've broken down this post into two parts to do justice to the number of ideas we're observing right now.

As the Small caps continue to outperform the market, the constituents belonging to this segment are expected to generate greater returns than the large-caps.

For now, it looks like this index is moving about in a market of its own. The next target that we're tracking is 9,650 and the risk management level is 7,850.

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.

We debuted a new scan recently- The Outperformers.

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.