Our macro-Monday relative strength analysis across the globe gives very few indications that big money is positioning defensively ahead of any impending bearishness. Rotation into commodities is usually the last act in the the play before investors begin embarking on a longer term course correction. And that's most certainly what we're seeing as investors looking for investment returns in dollars.
Latin America holds its persistent relative strength compared to rest of world (ROW), even against a weak dollar (UUP) and stronger SPY, which appears to be regaining relative strength rank over the past four trading weeks after a period of large cap stock consolidation. Very Bearish rated China (FXI) continues its relative weakness vs. ROW, and since it's 40% of EEM, some relative weakness has now crept into emerging markets over the past eight trading weeks. TLT remains weak relative to to US large cap stocks (SPY), developed economy stock markets outside of the US (EFA) and global high yield corporate bonds (HYG). It's a weak dollar market with very little appetite for defensive names. Signs of bullishness are everywhere for global stocks.
Latin America holds its persistent relative strength compared to rest of world (ROW), even against a weak dollar (UUP) and stronger SPY, which appears to be regaining relative strength rank over the past four trading weeks after a period of large cap stock consolidation. Very Bearish rated China (FXI) continues its relative weakness vs. ROW, and since it's 40% of EEM, some relative weakness has now crept into emerging markets over the past eight trading weeks. TLT remains weak relative to to US large cap stocks (SPY), developed economy stock markets outside of the US (EFA) and global high yield corporate bonds (HYG). It's a weak dollar market with very little appetite for defensive names. Signs of bullishness are everywhere for global stocks.
Once we add commodity stocks and US small caps (IWM) to the analysis, the late stage bull market picture begins to emerge. Relative strength in Copper remains persistent. Emerging strength in oil (USO) and ag (DBA), a return to strength for precious metals (SLV and GLD) and overall rotation into into the broad commodity basket ETF DBC, are all priced in dollars and tiered just above stocks in terms of relative performance. Price action is bullish with market participants positioning for more gains to come.
When we sharpen the focus and consider only US sectors, other than a one month bounce up in relative strength of healthcare stocks (XLV largely driven by improved recent price action in biotech and health care equipment stocks), we're just not seeing rotation into traditionally defensive areas of the market like staples or utilities. Other investors are likely looking for holes in the market, just like we are. In today's video, in addition to reviewing the price action and relative strength of different silos in the global economy, we use the power of Chaikin Analytics, which includes quantitative fundamental metrics to improve our trading accuracy.
RSS Feed