Today, after 4 fortunate years, I am leaving Fundstrat Global Advisors to join RBC Wealth Management as their in-house technical analyst. Prior to Fundstrat, I had a 25-year career on the sell side with RBC Capital Markets so I am very excited to join the buy side of RBC where I have many long-term relationships throughout the firm. Fortunately, like you, I will also be a client of Fundstrat. Tom Lee and John Bai have built an impressive research business that is unique on the street. I am very grateful to them both for the opportunity to work with the Fundstrat team and I am looking forward to continuing our relationship while at RBC Wealth Management.

More importantly, I want to thank YOU for your support at FSInsight. I hope my weekly notes and webinars we hosted have given you some technical tools and perspective to better manage your investments. Please connect with me on Twitter @rsluymer with any feedback.

Turning to the markets, as I noted last week, I view last week’s lows to be an important line in the sand for markets and many stocks. My view has been since the beginning of the year that a pullback or pause would begin by late January/early February. However, after ‘only’ a -4.5% decline by the S&P 500 to its 50-day moving average and a -5.46% decline by the Russell 2000, equity markets have been rebounding all week. Tom Lee, as usual, made an excellent call early in the week noting that the surge in the VIX, followed by a historic 3-day decline, effectively ended the correction. Most stocks have rebounded nicely keeping their uptrends intact as defined by rising 50-day moving averages. In fact, with the Russell 2000 making new price and relative performance highs, many clients are understandably questioning my expectation for markets to remain choppy through Q1. Without a doubt there are many areas that are showing strong price and relative performance trends. I am not a big fan of technical clichés, but these trends are your friend, and investors should stay long strongly trending groups and stocks.

Farewell FSInsight and Thank You! – A Few Parting Market Thoughts

However, one group I would encourage you to stay focused on in the coming weeks is the Semiconductors. I view Semis as one of the most important groups in the market as they often lead the broader market at turns and this week they have begun to lag and pullback. To be clear, I don’t view their recent pullback as a major problem for the market longer-term, but their recent divergence does reinforce my view sector rotation is likely to increase moving through Q1. Note that while the price of the SMH in the chart below has bounced back, the relative performance versus the S&P 500 has not kept up and is now challenging the prior low in January. I would view a break below that January relative performance low as confirmation leadership is beginning to churn and for more active investors to tighten risk control stops to those levels.

Source: Fundstrat, FactSet

  • Growth sectors, technology and consumer discretionary, remain range bound above their long-term uptrends and have yet to show evidence of breaking down as many have predicted.
  • Following up on last week’s comment, Cyclical are continuing to show evidence of rebounding from their pullbacks that developed two weeks ago. Remain overweight for 2021 and expect further choppy trading well into Q1.
  • Conversely, safety sectors are again stalling after bouncing back from oversold levels.
Farewell FSInsight and Thank You! – A Few Parting Market Thoughts

Figure: Best and worst performance sectors over past 3 months

Farewell FSInsight and Thank You! – A Few Parting Market Thoughts
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