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...

Nifty 50 has gone ahead and given us a signal of caution after a relentless rally. While we have seen days of a pause in short-term momentum in the past, this time around there's a slight difference.

Let's take a look at the daily chart to see what we've got here.

What would it take to finally end the long-term bear market in commodities?

How about Crude Oil Futures trading below zero?

Yes, remember when Oil traded in the negatives last year?

This is something most of us never thought was possible. If you had this on your list of possibilities, kudos to you I guess.

I didn't.

It's not a new chart - in fact it makes the rounds on a fairly regular basis.

The iteration I saw this week showed the relationship between global money supply, stocks and high yield bonds over the past five years. The trend for all three was the same - up and to the right, with early 2021 bring a fresh round of new highs.

For whatever reason, my first thought on seeing this version was that Wu-Tang Clan had it right all along.

This is the video recording of the January 2021 Conference Call.

It's NOT about what's happened over the past year.

Zoom out.

This is about what's been happening throughout the cycle, which appears to have ended.

Last Friday I sat down with Aaron Task of Seeking Alpha for a fun chat about today's market environment. Aaron and I have known each other for years from his days as the Digital Editor of Fortune as well as Editor-in-Chief of Yahoo! Finance. We also have a lot of friends in common.

It's always interesting talking to someone from the media about how little media I consume. In addition to the benefits of following price, and ignoring the "news", we discuss the current sector and market cap rotation we're seeing, the next direction for Bitcoin and Crypto Currencies, as well some other important tools and strategies that we're incorporating right now.

It's always fun to catch up with Aaron. He just serves me alley-oops.

Enjoy!

It's not a secret that Chinese Tech stocks have been breaking out all over the place to new all-time highs. We've been on this for a while. I remember specifically in the depths of the market crash in March last year, Chinese Technology was actually breaking out to new multi-year highs relative to the S&P500. This was happening during the worst part of the crash!

I remember thinking, "What the heck???"

And so they've been ripping ever since. But the market had already tipped its hand.

The difference today is that we're now seeing signs of structural outperformance. It's now Chinese Technology leading the way here bigger picture, no longer U.S. Tech.

Here's the Chinese Tech Index Fund $CQQQ breaking out of a mulit-month base to new all-time highs. You'll also notice how it's breaking out relative to the U.S. $QQQ representing the Nasdaq100 Index: