If you haven't heard by now, the Online Retail Index broke out to new all-time highs. We're not exactly seeing that from a broad-based perspective. This is not happening domestically and it's certainly not happening around the world. The rotation we're seeing among sectors and industry groups is real. Today we're going to focus specifically on online retail.

The way I see it, the question here is simple. Is the massive reversion, and return to these prior highs, "the" move? Or was that just a multi-year consolidation, and the move is just getting started?

Here's what that looks like:

Click on Charts to Zoom In

Now look at this group of retailers relative to the S&P500, which happens to be one of the strongest stock indexes on planet earth. So we're comparing it to strength, not cherry picking weak indexes:

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Jordan Kotick is one of the key people that early in my career inspired me to be more intermarket oriented. They would ask Jordan about the S&P500 and he would go into a tangent about bonds. They would ask him about Emerging Markets and he'd whip out, what he refers to as, "Chinese Dow Theory". For over a decade, Jordan was the Managing Director of Macro Strategy at Barclays and then Managing Director of Cross Asset Strategy at RBC Capital Markets. He is the first person to have ever been president of both the CMT Association (then called the MTA), and the Canadian Society of Technical Analysts (CSTA). In this podcast episode we talk about some of the great lessons Jordan learned over the years and what sorts of markets and charts investors should be paying attention to in the current environment. This was a really fun conversation and was great to catch up!

From the desk of Steve Strazza @Sstrazza

For the week ended Friday, May 8, 2020:

Every weekend we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Many of the relative trends in stocks that have been in place for a long time have come into question recently as they're showing signs of maturing due in part to the change in leadership we wrote about this week.

In this post, we'll highlight two structural intermarket themes that have remained robust throughout this tumultuous time for equity markets.

The first relative trend that hasn't slowed down at all is the relentless outperformance of the US over the rest of the world. Our first table shows the Wilshire 5000 (DWC) dominating every Global Index over just about every timeframe, from this week to the trailing year.

Click table to enlarge view.

The second theme is the continuance of...

If you know me by now, you know how much I enjoy all things Japanese. For me, it's the best cuisine on earth. The architecture in Japan is spectacular. I can't take the smile off my face whenever I'm there. If you can believe this, I even passed the Japanese Sake Advisor Exam earlier this year.

There's a blog post I've been working on for a while I titled, "Investing Like a Sumo Wrestler". But that's a conversation for another day.

This week I was watching the new documentary, "The Delicacy", about sea urchins and the divers who harvest them. Uni, which is what the Japanese call the edible part inside the sea urchins, is one of my favorite snacks in the world. You can get good ones from Hokkaido, Santa Barbara and off the coast of South America.

The documentary was awesome, even if you don't like to eat Uni, like my wife. She also loves visiting Japan, but she'll tell you she prefers Italy or Greece. I'm torn.

Anyway, watching this while having a glass of Junmai Daigingo sake, they brought up the concept of Ichigo Ichie. This is a philosophy that I learned about while...

The headline you'll hear is that unemployment rates are soaring to unprecedented levels. What I always like to point out is that stocks crashed months ago, collectively factoring in just that. Stocks are a discounting mechanism. It's more obvious today than ever, and I think this is a nice reminder. 

From the desk of Steve Strazza @Sstrazza

There aren't too many charts in the Equity Markets breaking out of decade-long bases on an absolute basis right now...

This week's Mystery Chart was though, and the vast majority of you were buying it against former resistance turned support. We agree with that approach and would be doing the same here.

Thanks as always to all those who participated, but there's just one catch...

The chart was inverted! This means most of you were actually selling the breakdown in the Latin America 40 ETF (ILF).

When we talk about "Precious Metals", it can mean a lot of things. You've got the metals like Gold and Silver, which are behave very differently at times, and you have the stocks with all sorts of market capitalizations. There are a lot of ways to describe the precious metals space, so let's get into a little bit of that today.

Here is a chart of what this group looks like this year. Notice the outperformance from the Gold Miners Index Fund, almost twice the performance of the metal itself. The little guys and silver in general didn't perform nearly as well:

Click on Charts to Zoom In

From the desk of Steve Strazza @Sstrazza

There has been a lot of talk about the potential implications on the broader market if Mega-Cap Growth and Technology stocks were to lose their leadership. Since they have been responsible for driving much of the gains in the major averages for years now... we can only ask ourselves, who might pick up the slack if and when this happens?

In this post, we're going to analyze the top-performing areas today and compare them to their strength before the market crashed in February and March.

We'll also look at the leaders from back then and see how they're holding up today.

This will give us an idea of whether we really are undergoing a change in leadership or not, and if so, where the new areas of strength are.

The broader markets are starting to show signs that we may be setting up for some sideways-to-down chop.

And one sector that is likely giving investors fits is the financials. During this recent "recovery," $XLF has continually been underperforming relative to the S&P. JC shared this chart today highlighting this observation:

With Financials, arguably America's most important sector, making lower lows relative to the rest of the market, it's hard to see them emerge as new leaders. New decade+ relative lows in $XLF is not what you want to see if you think the stock market is going a lot higher. It's actually the opposite.

I look at Regional Banks and wonder, Is this a major bottom? Or is this just a normal consolidation within an ongoing trend? So then I look at momentum in a bearish regime, and its parent sector, Financials, breaking down to the lowest levels relative to the S&P500 since March of 2009:

From the desk of Steve Strazza @Sstrazza

New Mystery Chart!

For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

From the desk of Steve Strazza @Sstrazza

Gold (GLD) broke out of a multi-year base last year and has more or less been trending higher since. No new news there.

But as JC explained in a post last week, Gold Miners (GDX) have finally broken out of a 7-year base as well after recently taking out resistance at key prior highs.

Today we're going to take a deeper look at the space.

We love setups like the one in Gold Miners right now. Not only did GDX resolve higher from a massive base but there is also a hefty amount of price memory at the breakout level which should act as solid support going forward.

Click on chart to enlarge image.

Our risk management level for GDX is 31 and as long as we remain above that level we think 43 is next and over the long-term price will likely test its 2011 all-time highs at 62. But we'll worry about that once it matters. We need to get to 43 first.

Price has been consolidating constructively...