Topley’s Top Ten – February 20, 2020

Author

Matt Topley
February 20, 2020

1.Momentum Vs. Value and Large Cap vs. Small Cap Themes Continue.

MTUM Large Cap Momentum ETF +8% vs. SPYV Large Cap Value ETF Flat

Mega Cap ETF +5% vs. Russell 2000 Small Cap +1.67%

2.MSCI Europe Sector Weight Technology 6%…..So EU Decides to Ramp Up Regulation on Foreign Tech

Morning Brew

3.January Housing Starts and Building Permits Surprise to Updise

Residential construction continues to surprise to the upside.The January housing starts and building permits exceeded market expectations.

4.Shares of Stocks on the NYSE that are at 52 Week High Sets Two-Year Record

Thechart below (green lines) highlights the last two times the share of stocks onthe NYSE that were at 52-week highs set a two-year record. Since 1975, ithappened 13 other times.  How did stocks respond? Two, six and 12 monthslater, the S&P 500 traded higher 11 of 13 times (85%). That kind ofstrength is a reflection of momentum, and momentum does not die quickly.

Opinion: Stock marketbulls will trample the bears this year, according to the weight of the evidence

5.China Taking Massive Steps to Bail Out Airlines.

Dave Lutz Jones Trading

Global Carriers Stopped80% of Flights to China-China is considering measures such asdirect cash infusions and mergers to bail out an airline industry crippled bythe coronavirus outbreak – One proposal involves allowingsome of the nation’s biggest carriers to absorb smaller ones suffering the mostfrom the collapse of travel.  In an unprecedented move, global carriers stopped about80% of their China flights and local airlines grounded enough planes to carry10.4 million passengers. The disruptions have reduced China’s aviation marketto the size of Portugal’s

6.Updated Retail Sales Breakdown …Online, Warehouse Stores and Department Stores.

Ed Yardeni

7.80% of Countries Had PMI Above 50 in January

Trading Economics

Definition of ‘GlobalManufacturing PMI’

Themanufacturing data will always be published on the first US working day ofevery month, one hour after publication of the ISM manufacturingsurvey.The following is from JP Morgan’s marketing material and as such is promotionalin nature:

  • It is the earliest indicator of Global economic and business conditions, produced on a monthly basis ~ released at the start of every month with data relating to the month just passed.

  • It has a strong track record of accurately anticipating global GDP data.

  • It is derived from data produced using internationally comparable methodologies covering aound 10,000 survey respondents in over twenty countries, which collectively represent 76% of global economic output.

  • It has wide sector coverage, including both manufacturing and services.

8.Energy vs Tech could be the monster mean reversion of a lifetime

Posted February 5, 2020 by Joshua M Brown

Check out my Chart o’ the Dayfrom Jon Krinsky, I love this stuff. It gets right to heart of all the thingswe talk about here – cyclical vs secular, and how to tell which is which, valuevs growth, innovation vs entrenchment, etc.

Energy vs. Technology –the daily RSI hit 9 yesterday, the lowest reading since we have GICS data backto 1990. Interestingly, the ratio itself is nearing its all-time low made onMarch 24th, 2000 which was of course the all-time high for theNasdaq 100.

Source:

StrangerThings… Energy vs. Tech spread most oversold since at least 1990, reversionlikely… Baycrest Partners – February 5th, 2020

9.The Problem With This Trade….Debt

WSJ

U.S. oil-and-gas companies needcash, but it won’t come at a cheap price.

Explorers and producers have more than $85 billion of debtmaturing over the next four years. Those with junk-rated debt will likely havea hard time tapping capital markets in 2020, increasing the odds for wave ofdefaults, according to a new report by Moody’s Investors Service.

10. 7 Rules for Living

Ourpersonal life rules should be flexible, because life’s always changing.

Ourpersonal life rules should be flexible, simply because life is always changing.It changes as we age, as cultures advance, when finances shift, and when the environment struggles; these things andmore force us to change how we deal with life. That being said, here are a fewthings I have learned over the decades that may help you avoid some of life’spitfalls.

1. Tryto keep things simple. When I’m writing a book or working on a film, Imake sure these three things take place. I wake (which includes coffeeand visualization), I walk (because if I don’t keep moving,my body will rust), and I work. Between projects, I take care of personalbusiness, and this is also a great time for any focused growth work. 

2. Spendmore time just being rather than thinking or doing. John Bradshawonce asked his audience, “Are you a human being or a human doing?” Well, I havedone a lot (though not nearly enough, as I see it), but balance is key, andspending a little time each day just making my inner life better has an amazingeffect on the outer stuff as well.

3. Don’tlet your mind lead you into dark places. In most cases, if we are feelingout of sorts, and we are really unable to focus on anything, our minds can be adangerous place to be alone in. We all have hard memories that can creep inwhen we are hungry, angry, lonely, or tired (HALT). If you find yourself inthat place, grab a sandwich, flip on a comedy, and take a nap.

4. Makesmall improvements in one area of your life every day. Knowing that youare continuing to move forward is very rewarding, and all it takes is one smallstep. From cleaning out a junk drawer to writing the next great American novel,it all happens one action at a time. 

5. Keepyour body moving. I’m glad there are stairs in my house, and I try only touse the upstairs bathroom to ensure climbing a couple of flights a few times aday. Taking walks outdoors is great.

If you’redriving to the mall, try parking at the back of the lot, so there’s a good walkin and out. You can also take the stairs in office buildings. I generally useany opportunity available to move a little more, because I have to make up forthe fact that I hate gyms. 

6. Bemore mindful of what you eat. At least swear off soda of any kind. If youenjoy drinking carbonated beverages, get a SodaStream.

My wifeis good at keeping things healthy, so I follow her lead, and there is noquestion that eating better has given me more energy. See what happens when youeat better too.

7. Keepingbusy is one of the keys to contentment. Generally speaking, the person whohas too much to do is far less stressed than someone who doesn’t have enough goingon. So do what’s in front of you, and if you can’t think of anything, pick up abook and build your brain.

Theseseven practical little rules of living can make a big difference in how yofeel. In addition to making you feel better, people around you will see thepositive effects and naturally becomemore engaged with you.