Edition #163
Premium Market Update
Investors,
In last week’s premium report, I shared two strong signals from the S&P 500 which increased bullish probabilities significantly. I reconciled this against my recent bearish comments on U.S. stocks, claiming that “long-term investors [should] feel much better about current market conditions despite increased short-term volatility.”
I also shared critically important price structure of the S&P 500, citing a channel breakout that was yielding strong results at the time. Cumulatively, I said that the bullish signals and price action didn’t nullify the bearish analysis I had recently provided; however, they certainly increased bullish probabilities. Those bullish probabilities continued to increase this week, with most of the major U.S. indexes gained additional upside momentum. Weekly performance for each index was:
Dow Jones Industrial Average $DJX: +0.3%
S&P 500 $SPX: +1.8%
Nasdaq-100 $NDX: +2.3%
Russell 2000 $RUT: -0.4%
With small caps having the worst performance of the group, this reaffirms the conclusion from analysis I recently conducted on the Nasdaq Composite Index (over 4,100 stocks) vs. the Nasdaq-100 (the largest 100 stocks on the exchange). I shared the following on Twitter on March 22, saying:
“Nasdaq-100 $NDX vs. the Nasdaq Composite $COMPX:
$NDX seems more attractive than $COMPX for two reasons:
Stronger breakout above the white trendlines.
$NDX is above the Q1 & Q2 2021 resistance range (grey), while $COMPX is still beneath it.
Bullish for large > small caps?”
I continue to believe large caps will outperform small caps on a risk-adjusted basis, particularly as market conditions remain uncertain.
In this newsletter, I’ll be analyzing the following topics
Under-the-hood S&P 500 metrics that continue to increase bullish probabilities.
My outlook on commodity & energy-related stocks. In Premium Edition #151, I shared 19 energy stocks that I believed were poised to deliver strong upside in an uncertain market. Today, the average return of those 19 stocks is +15.4%.
Why yields and stocks might be rising in tandem, a deviation from their historical correlation.
Analyzing $ARKK and why it’s the most important chart to watch this upcoming week.
Let’s get started!