From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

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.

Change is the only constant.

Well, Nifty 50 is really not interested in that statement because it continues to remain messy. But in this messy move, we've seen certain sectors outperform the others. One among the outperformers is the Pharmaceutical sector.

Are there any new breakouts in the sector constituents? A few, yes.

Let's do a deep dive in this sector and see what comes up.

We've been talking about this for a long time: this year is NOT last year.

The things that worked for the last 3 quarters of 2020 are not working in 2021. Stocks are a mess. Growth is a massive underperformer. Small-caps can't stop churning sideways. Defensive assets stopped going down. Gold is going up. Consumer Staples are outperforming. The nasdaq is the weakest of all the indexes.

None of these things remind me of last year at all.

We discussed all this and more on Yahoo Finance this morning:

You notice how investors often like to overstay their welcome?

The people throwing the party give them plenty of opportunities to get out. The music stops playing. The food is already gone. The lights even get turned off.

But some people still choose to stay, almost as if they have no where else to go.

And then they sit around wondering what happened?

"Oh, the DJ going home meant the party was over?"

"What do you mean they're not ordering any more food?"

"Who turned out the lights?"

These are what we call "Bag Holders".

They're an important part of the market cycle, because these are the people who are buying all the shares that the rest of us need to sell, so we can head over down the block to the much better party. The one that's just getting going.

In life, you need these sorts of people.

We should not make fun. We should not troll. We need to be thankful.

It's people like this who provide the necessary liquidity for the rest of us to dump our shares on.

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.

The bullish picture still lies as a structural backdrop.

But now, we're seeing mixed signals as many areas have become increasingly vulnerable in recent weeks. This is all taking place as defensive assets have found a footing for the first time in over a year, while risk-on assets approach logical levels of supply.

Recent weakness has been particularly isolated in former leadership groups, like Small-Caps and Growth-heavy areas. 

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. We can then put these near-term developments into the context of the big picture and glean insights into the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

We've been talking about this rotation out of Growth Stocks and into Value Stocks since last year. The trend here has been very strong.

We keep seeing this all over. Check this out for more.

Another chart that stood out this weekend was the number of new 52-week highs on the NYSE, which has much more exposure to value and much less growth.

Meanwhile, the Nasdaq, which is almost all Growth, isn't seeing these new highs at all.

No one wants them.

From the desk of Steve Strazza @Sstrazza

Welcome to our latest "Minor Leaguers" report.

We've already had some great trades come out of this Small-Cap focused column since we launched it late last year and started rotating it with our flagship bottoms-up scan, "Under The Hood."

Ultimately, to make the cut for our Minor Leagues list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort by proximity to new highs in order to focus on the best players only.

This week we're looking at two long setups in the Pharma sector. With Nifty Pharma breaking out above its resistance of 13,500, a couple of stocks that we've been tracking for quite some time now have also followed through with a breakout.

Let's take a look at these names and track their levels going forward.

Have you noticed how it's the Value sectors that keep shining this year?

It's not Tech. It's not growth.

This isn't 2020.

This is 2021. 

Deal with it.

When was the last time you saw relative strength like this coming from Financials and Materials?

Every month we get a fresh batch of Monthly Candlesticks. It only happens 12 times a year.

I promise you guys from the bottom of my heart that there is no other part of my entire process that provides as much value and information as my monthly chart review. Premium Members can access the Chartbook here.

In the meantime, my friend Josh Brown and I have been doing these short monthly videos since last summer.

On this latest episode we talk about how the market is behaving like it normally does in Year 2 of Bull Market cycles. Choppy, messy, and with a much different profile than the prior year. And, not only is that normal, but anything else would be historically abnormal.

Defensive areas like Consumer Staples, Gold, Bonds and Japanese Yen have been shining. We didn't see that in Year 1. It was the exact opposite.

We like shorting the Nasdaq here and being very picky when looking for Value stocks to buy.

This is always a fun chat.

Hope you enjoy it!