New!
01.27.2022 11 new posts under Morning Note (8), Compliance Docs. (2), CAPIS Insights (1)

CAPIS Insights

News

CAPIS Insights

"December Research Call RECAP: Long Term Technicals Says Market is Overbought, Expect Defensive Rotation"

posted by CAPIS on 12/20/2021 at 11:12 am

by CAPIS

12/20/2021 at 11:12 am

 

Last week we held our December research call, featuring Fairlead Strategies Co-Founder Katie Stockton. Fairlead Strategies, LLC is a Connecticut-based independent advisory service providing unbiased technical analysis, helping investors manage risk and discover opportunities.

 

 

Katie Stockton’s presentation addressed the following topics:

 

SPX is in Final Resistance after Positive FOMC Reaction: 

  • Long-term momentum remains positive since 2020, but expect resistance according to MACD indicators. (4:55)
  • Despite some improvement in short-term gauges, a January correction could be coming. (6:00)
  • The market may be moving out of a relatively low-volatility cycle during first quarter 2022. (6:29)
  • Large-cap growth has been a source of outperformance compared to a small-cap slump. (6:44)

Market Appears Exhausted

  • While the “Santa Claus” rally is in play, stocks appear “tired” and are overbought, according to DeMark Stockton is waiting until January to hedge and reduce exposures ahead of expected Q1 volatility. (7:34)
  • Expect further corrective price action in January. (8:00)
  • The VIX is stuck in a 20-28 range, but a move through 28 would indicate a volatility breakout and heightened risk. (9:35)
  • Market breadth has contracted. (10:41)

 

Sector Rotation Afoot

  • Sector rotation has indicated a shift from technology & discretionary stocks to defensive securities – i.e. cyclicals, utilities, REITs, and h(13:57)
  • Best way to outperform is taking advantage of sector sentiment shifts and overweight defensive stocks. (15:02)
  • Retailers can expect a tough first half of 2022 versus staples. (17:41)
  • Stocks remain “the place to be” versus global stocks. (18:17)

 

Commodities

  • WTI crude oil is now reacting to long-term overbought conditions and will go into a “corrective” phase – no major breakdown in levels but expect range-bound (19:05)
  • Gold prices are poised for a relief rally after directionless year. (20:22)
  • 10-year Treasury yields are in a corrective phase. (21:30)
  • Bitcoin has lost some upside momentum after failing to break through resistance. (22:30)

For questions or to learn more about CAPIS, please reach out to webinquiry@capis.com and follow us on Twitter (@capisinc) and LinkedIn for more updates and insight from our team.