January 18, 2021
Weekly Market Outlook
By Keith Schneider
I have been reviewing lots of graphs and charts that I come across and many others that people e-mail to me. I am always intrigued by all the statistics that people put together showing what might occur in January and how it foretells the remainder of the year.
I also enjoy seeing the graphs and tables showing what should occur if we come off two good quarters, like the 3rd and 4th of 2020, and what should happen the following 6 and 12 months after.
Yet, my long tenure in this business tells me stock performance and the market is about earnings, inflation, and interest rates. Even more important to us is the technical picture of stocks, which determines risk control and trade management.
We look at many variables, including volume, advance-decline lines, buying or selling pressure (accumulation and distribution days), moving averages, and many more. To sum it up, we incorporate the skills of a macro economist with the timing of a floor trader.
Our company was founded and continues being managed by three traders who all traded for themselves on the Floor of NY Exchanges. We developed our models and technical strategies with risk management as one of our highest priorities. Over the past 15 years, we built powerful investment models that are constructed to deliver alpha over benchmarks that have superior risk-adjusted returns.
Our Big View chartbook is one of the most powerful tools we’ve created for you to be able to quickly review what is going on in the markets. This all-inclusive look at the technical side of the market was constructed to answer many of the questions that help us, and YOU, to determine what the health of the market is, which direction do we take and risk levels.
Additionally, you can see where money is moving - is growth or value being rewarded? Is the US or foreign markets doing better? And, where the risks are today, and where there might be hidden problems for the markets moving forward? We urge you to get used to using the BIG VIEW and become someone who understands where we currently are and where we may be going.
One last point, if you are a diversified user of our investment models, then you are aware that spreading investment dollars among different and disparate models helps to diversify risk and exploit the different edges we have found.
This year, so far, we have had this exact scenario play out as both our IWM Alpha Rotation as well as our Small Cap All-Stars are leading the way. Up over 8%, Small Caps are hitting their stride while Large Caps are barely breaking even, and tech stocks are down thus far.
Additionally, within the ETF Complete model, we have a situation where the sector part of the model on its own is up over 9% thus far. It pays to spread your investment dollars across several (if not all) of our models. It is far easier to manage risk and excel even when we have mixed signals.
The highlights of this week’s market action are as follows:
This week's free video: