The days grow shorter while a spirited market continues to blossom. There’s a cycle for everything, markets have their own timing, and no matter what change is coming.
This market is effervescent with SPACs, plenty of early stage investment, and a wave of public offerings fed and nurtured in a hot-house decade old financial greenhouse.
Don’t fight it but don’t be fooled by it either. Supply will fill what was a shortage of investments available for speculative consumption - at some point we’ll all go on a diet. For the moment eat hearty but don’t be picky and stick to old favorites. There are changes coming to the banquet’s menu.
Let’s go to this week’s summaries as quickly as possible.
What was stopped out included: Best Buy, Etsy, Peloton, Nautilus, and Sam Adams. These charts have been the posterchildren of the leaderboard for many weeks. I did say that the Top 20 long leaderboard would change and here we are at last.
The end of some powerful trends was bound to happen - it always does at some point - but maybe they’ll be back in a few weeks or months.
The Top 20 as of this week is fascinating. I remember Plug Power - at last it has its day, along with many other former popular names or high flyers which fell from grace.
The top charts include the following ideas. I suspect some of you were already in these back in March 2020 and are celebrating. Trend followers are always “late” but it’s ok.
I mentioned what was stopped out, and what the current Top 20 looks like. Another big tell about the market is how many sell ideas have been stopped out.
Shall I tell you how interesting it is? I wondered last week if energy bottomed out. Just as Exxon (XOM) shrank and energy’s share of the market shrank to a fraction of it’s 800 pound gorilla index status 40+ years ago, maybe it’s time for those of you who like to bargain hunt to get to work. Take your time, these kinds of things build slowly.
Here is a list of stopped out SELL ideas - and so many of them are energy related.
Let’s move on to the two dozen-plus long ideas as of this week with early notes.
China, Japan, Industrials (chemicals and packaging). Semiconductors stand out.
Packaging. Varied reasons for demand. Here are 2 that doubled since March 2020.
Plenty more ideas in that list to review but semiconductors are on my mind.
Let’s recap.
A lot of sells have been stopped out. Some Q2/Q3 2020 strong longs have been stopped out. There are a lot of new long ideas coming in. New trends are coming. Change.
Call it rotation, a shift from growth to value, a shift between equal cap vs. market weighted, the beginning of turn in risk and yield, or a role-reversal where pariah becomes paragon and vice-versa, hot stocks die and dud stocks come alive. It’s coming.
I wasn’t just riffing about 2021 being different. I was expecting (and hoping) for it.
You don’t have to read the following “macro” type charts, I’m posting these notes to help me keep them in front of my market mind.
A few charts from some big market minds which seem to message “change”.
We have time, according to this Ari Wald breadth chart posted by top technical mind JC Parets. My default time frame is roughly 18 months. So maybe Q1/Q2 2022? It’s easier to watch than predict.
Jesse Stine, shared this 2/10 bond yield chart pulled from friend Rob Koyfin’s platform.
This Value vs. Growth forward P/E comparison dovetails with something I read about the returns on pariah tobacco dividend stocks - which could be something to invest in and ride if there are breakouts coming. I’m not a fan but I will watch it.
Macro expert Lyn Alden posted this the other day and it all feels of a piece.
I don’t have answers or predictions but 2021 is going to be different on many levels.
Personal Note (no market or investment ideas and NO need at all to read)
A quiet week in some ways. I ended last week with a focus on building.
I will be spending more time to resume the work of “me”. I’m not sure how it all plays out but I do know that I still have “stuff in the basement”. Everyone has this version of it. Don’t wait for a special day to work on it. Today is that day. Go do you.