The Percent of global markets trading above their 50-day average is faltering. It's dropped to 78% (83% for Developed Markets & 74% for Emerging Markets). Below 70% is a warning for the market, below 40% is usually bad news.

Check out the Chart:

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

We continue to experience a bullish expansion in participation from stock markets around the world.

Just a few days ago we discussed buying Israeli stocks and explained how their strength at the index level was being driven by their heavy exposure to Technology.

Mega-Cap Growth and Tech stocks (we're including Communications and Discretionary here -- "Tech but not Tech" names such as Alibaba, Tencent, Meituan, JD.Com, etc.) are also a dominant market force in China.

We wrote about this exact topic in November, and how strength from these names would likely continue to propel these Large-Cap Chinese Indexes and ETFs higher. The Chinese Tech ETF $CQQQ and iShares Large-Cap China ETF $FXI tacked on an additional 24% and 12%, respectively in the time since.

This week on the podcast, Jonathan Krinsky joins me for a chat about Sector Rotation. While the Mega-cap names like Apple, Google, Facebook, Amazon and Microsoft grinded sideways, or even down, since August, the Small-caps, Mid-caps and Micro-cap names have been the leaders. What happens if the Mega-caps break out of these bases to new all-time highs? Does the sector rotation continue? Or do we then rotate into the more defensive areas like Staples, Utilities and REITs, which currently keep making new relative lows?

The market had given us an indication of a weakening short-term momentum at the end of last week. We thought this would be a good time to go through the sectoral indices to identify strengths and weaknesses.

Read on to know more.

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

Last week's Mystery Chart was the Israeli Tel Aviv 125 Index zoomed all the way back to the start of this century.

You might be wondering why we're discussing Israeli equities of all things...

The short answer: They're making new all-time highs.

In this post, we explore the sector that is mainly responsible for these gains, dive into its strongest components, and outline some long ideas with risk/reward setups skewed in our favor.

Not only is this yet another group of stocks we can use to express our bullish thesis on risk assets -- it is also excellent information. Once again, we're seeing another development pointing to the increasing participation and improving breadth across international equity markets.

This move in Israeli equities also fits into a larger theme that is taking place beneath the surface for stocks all around the world. It's difficult to overstate the significance of these moves.

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.

As we discussed in last week's report, bears have a lot of work cut out for them.

With all this rotation into offensive groups and cyclical areas of the market, they are really running out of talking points. We literally can't find a meaningful group of stocks in the US or even abroad that we would want to short at this point.

This is excellent information as it's not something we can say very often... and it's bullish, just to be clear.

I'm getting trolled more than I have in a long time. It's almost like people are mad at me for being as bullish of equities as we've been, and continue to be...

What's everyone so angry about? I don't understand.

Anyway, yes there are stocks we want to buy. Can some stocks go down? Sure. Does that change the fact that there are stocks we want to buy or own? No.

As far as potential headwinds for stocks go, I've got 3 pretty simple ones today.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending January 25, 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.

In the week gone by, we saw a weakening sentiment develop on the Nifty 50 daily chart. We looked at this through a lens of caution and continue looking for signals that either strengthen or negate this thesis.

At All Star Charts we follow a top-down research approach whereby we track all the asset classes and global markets in order to arrive at our view. In our weekly analysis, we carried out the same process and saw a pattern worth mentioning.

Let's take a look at some charts!

The latest E-Trade StreetWise survey, which is put out quarterly, revealed most investors (66%) believe the market is in bubble territory, and another 25% think it’s approaching one.

Check my math, but that's over 90% of investors thinking we're in or near a bubble.

A bubble!

Everything needs to be a bubble.

You see why we can't have nice things?

I mean, what ever happened to a series of higher lows and higher highs defining an uptrend?

Too simple?

Not intellectual enough for you?

Fine. Let's get into facts.

The Dow Jones Industrial Avg and Dow Jones Transportation Avg did nothing for almost 3 years, and just broke out in the 4th quarter last year. Is this a bubble? Or just the beginning of a new uptrend?

One of the main themes we've been hitting on in the past few months/quarters is the aggressive shift in leadership down the market cap scale.

When we take a step back, this all jives with what we're seeing in other asset classes as investors are rushing into risk assets as they position themselves more offensively.

This development really began last March as the market was bottoming from its swift Q1 selloff.  Although the relative trend really accelerated in early September as Mid, Small, and Micro-Caps began to drastically outperform their Large-Cap peers.

Let's take a look at how this cap-rotation has impacted some of the secular leaders at a sector and industry level.

We put out a post highlighting the negative divergence in Nifty50 on the daily chart this week.

While short-term investors have something to look into, should long-term investors re-evaluate as well?

Read on to learn more...