stocks

Wow.  The US economy is going full blown re-open by June.  _STRATEGY: SMALL-CAPS NEEDED TO CLOSE "UP" MONDAY, WHICH HAPPENED --> SIGNALS MUCH GREATER GAINS AHEAD_ Last week, we alerted our clients to a possible important capitulation taking place in small-cap stocks (IWM ETF our proxy) and again, saw signs of key confirmation Thursday.  This was driven by the emergence of the DeMark '9' buy set up Wed and '13' combo buy signal Thursday.  - At that time, this paved way for a dramatic >10% move in next two weeks (mirroring XLE signal from 4/23/2021) - It was important for IWM to close "up" on Monday - Monday, IWM close +0.1% (opened down 1%) - IWM did what it needed to do and this is a bullish signal - This strengthens the case for a +10% move within the next few weeks, mirroring the +18% move that XLE saw Thus, we think the Epicenter trade will come back strong in a big way next few weeks.  This, unfortunately, signals further weakness for Technology/hypergrowth as well. _... CDC ABRUPT "EASING" OF FULLY VACCINATED EXPLAINS THIS DRAMATIC REBOUND IN EPICENTER AND SMALL-CAP STOCKS_ The natural question (we expect our clients to ask) is why did Epicenter and small-caps "U-turn" last Wednesday? - in our view, this is a result of the CDC abruptly restrictions for fully vaccinated Americans - this solidifies the US economy set to fully re-open in June Naturally, this would be a risk-on signal for Epicenter stocks and small-caps are a strong proxy.  And indeed, last Wednesday seems like the bottom.  And Monday's follow on strength in IWM signals the "bottom is in" _... CDC IS STILL SET TO FURTHER EASE SOME RESTRICTIONS = UPSIDE FOR THESE STOCKS_ We don't think the re-opening is fully discounted in stock prices.  Anecdotally, based upon our hundreds of zooms/calls over the past few weeks, institutional investors are generally leery and skeptical of Epicenter stocks.  Instead, clients are concerned about inflation and Fed policy and thus, have continued to Overweight "quality Growth" aka FANG aka crowded trades. In our view, here are some industries that could see a step function easing of CDC restrictions.  And if this takes place, would be a "positive surprise" and further drive upside: We have indicated these most "obliterated" industries below: - Cruise lines - Theme parks - Airlines - Concerts + live events - Gyms + fitness We think these stocks could see dramatic gains over the next few weeks.  Of course, there are other groups listed below, but the list noted above seem to have been hit the hardest. - these industries forced to halt essentially to zero activity - CDC has been slow to lift restrictions - CDC has been abruptly lifting restrictions, and these groups could see easing soon = should be positive surprise so investors may start allocating to these groups _STRATEGY: 28 STOCKS IN THE MOST "OBLITERATED" EPICENTER GROUPS_ I asked tireless Ken and the data science team to compile a list of stocks hit hardest by the pandemic and suffering the worst from the restrictions placed by the CDC. This is not the complete list.  We can provide you the complete list, just send us an email. These stocks are screened using our DQM quant model: - Airlines              LUV, ALK, JBLU, ALGT, HA - Cruise lines       CCL, RCL, NCLH, LIND - Casinos              LVS, WYNN, CHDN, BYD, SGMS, IGT, MCRI - Theme parks    DIS, CMCSA, SEAS, SIX, FUN - Live events       LYV, AMC, MSGS, IMAX, MCS - Gyms+fitness   PLNT, CLAR, NLS BOTTOM LINE: We remain positive on equities, and see signs of capitulation.  Our top 3 sectors remain: - IWM set for a tactical 10 day rally, back to $230 possibly - Top 3 sectors still Energy, Materials and Financials --> $XLE $XLB $XLF - We are cautious on Technology and recommend using strength to reduce --> $XLK $QQQ  _ __ADDENDUM: WE ARE ATTACHING THE STOCK LISTS FOR OUR 3 PORTFOLIOS:_ _We get several requests to give the updated list for our stock portfolios.  We are including the links here:_ _- Granny Shots  -->       core stocks, based on 6 thematic/tactical portfolios_ _- Trifecta epicenter  --> based on the convergence of Quant (tireless Ken), Rauscher (Global strategy), Technicals_ _- Violence in USA --> companies that are involved in some aspect of home or personal security. WE ARE NOT "RECOMMENDING" THESE STOCKS, BUT RATHER, BRINGING THESE STOCKS TO YOUR ATTENTION._ Granny Shots: Full stock list here --> CLICK HERE Trifecta Epicenter (*): Full stock list here --> CLICK HERE Power Epicenter Trifecta 35 (*): Full stock list here --> CLICK HERE Violence in USA: Full stock list here --> CLICK HERE _(*) Please note that the stocks rated OW on this list meet the requirements of our investment theme as of the publication date. We do not monitor this list day by day. A stock taken off this list means it no longer meets our investment criteria, but not necessarily that it is neutral rated or should be sold. Please consult your financial advisor to discuss your risk tolerance and other factors that characterize your unique investment profile._ POINT 1: DAILY COVID-19 CASES 24,625, -7,779 VS 7D AGO... DAILY CASES SET TO DROP TO SUB-10,000 BY THE END OF MAY... _____________________________ CURRENT TRENDS -- COVID-19 CASES:  - Daily cases    24,625 vs 32,404 7D ago, down -7,779 - 7D positivity rate   3.1% vs 3.3% 7D ago - Hospitalized patients   26,703 down -13.9% vs 7D ago - Daily deaths    564,  down 12.4% vs 7D ago _____________________________ - The latest COVID-19 daily cases came in at 24,625, down -7,779 vs 7D ago. The US continues to see a persistent decline in daily cases. Recall, Sunday was the first time that daily case figure falls below 20,000 since June 2020. With increasing vaccine penetration, we believe the case figure will continue to drop. In fact, the 7D delta has been negative over the past 4 weeks and if this speed of decline persists, we could see the daily cases drop to sub-10,000 before June.  _7D DELTA IN DAILY CASES HAS TURNED NEGATIVE IN THE PAST 4 WEEKS..._ The US continues to see a steady decline in daily cases. The 7D delta has been negative in the past 4 weeks. Over the past few days, the 7D delta has been stable at negative 5,000 - 8,000 per day. If this speed of decline persists, we could see the daily case figure drop to sub-10,000 before June.      _ _ _CURRENT HOSPITALIZATION, DAILY DEATHS AND POSITIVITY RATE ALL APPROACHING ALL TIME LOW SINCE THE PANDEMIC..._ Below we show the aggregate patients who are currently hospitalized due to COVID. After a mini-surge in March, the number of patients currently hospitalized starts to roll over again. Positivity rate is also following the similar pattern. Currently, all three metrics - current hospitalization, daily deaths, positivity rate - are approaching all time low since the pandemic.     POINT 2: VACCINE: ALL STATES REACHED ~70% INFECTED + VACCINATED... NEARLY HALF OF AMERICANS HAVE RECEIVED AT LEAST ONE VACCINE DOSE... _____________________________ CURRENT TRENDS -- VACCINATIONS:  Vaccinations ramping steadily - avg 2.0 million this past week vs 2.0 million last week - overall, 36.9% fully vaccinated, 47.1% 1-dose+ received _____________________________ THE CDC DID NOT UPDATE ITS COVID VACCINATION TRACKER DATABASE ON MONDAY, MAY 17TH. ALL DATA ABOVE AND WITHIN THE CHARTBOOK IS AS OF SUNDAY, MAY 16. POINT 3: Tracking restrictions lifting and subsequent effects in individual states Point #3 focuses primarily on tracking the lifting of restrictions, as states have eased the majority of mandates.  Keep in mind, easing/lifting restrictions are contingent upon state of emergency ordinances being renewed.  - States in groups 1 and 2 represent states that let their emergency ordinances expire, or that never had one in the first place - Note: IL and HI are not listed. This is because restrictions lifting is determined at the county / island level, and no statewide policy will be established to lift restrictions until a full reopening So there is a spectrum of approaches.  Our team is listing 3 tiers of states and these are shown below.   - states that eased all restrictions in 2020: AK, OK, MO, FL, TN - states that have eased all restrictions in 2021 to now: ND, SD, NE, ID, IA, MT, MS, AZ, SC, WY, TX, GA, AR, KS, WI, IN, AL, UT, NH - states that are still easing restrictions in 2021: OR, ME, WV, WA, MN, MA, NC, KY, LA, CA, DE, PA, NM, OH, CO, NJ, VT, MD, NV, NY, CT, VA, MI, RI, DC GROUP 1:  STATES THAT LIFTED RESTRICTIONS IN 2020... The daily case trends in these states are impressive and it is difficult to say that lifting restrictions has actually caused a new wave of cases because the case trends in these states look like other states.   GROUP 2: STATES THAT HAVE LIFTED RESTRICTIONS IN 2021 TO NOW... Similar to the list of states above, the daily case trends in these states are impressive and it seems that lifting restrictions hasn’t caused an increase in cases.   GROUP 3: STATES THAT ARE STILL EASING RESTRICTIONS IN 2021... These states have begun to lift restrictions but have yet to ease all restrictions.  The date of each state’s most recent restrictions lifting is indicated on each chart.  The case trends in these states have been mostly positive. - Easing restrictions appears to have contributed to an increase in cases in several of these states, most drastically in OR, ME, WA, and MN