The Strazza Letter Articles

More and more risk-on areas of the market are perking up with every passing day.

We’ve watched risk-appetite steal the show overseas in recent weeks, and now we’re seeing it stateside in US markets.

Small caps have outperformed off the April lows.

Speculative growth and ARK stocks have outperformed off the April lows.

Tech has led. Discretionary has led. Growth has led. High beta has led. 

All of this leadership boils down to the same thing.

Investors are embracing risk at an increasing rate. They want more exposure to the riskiest stocks and assets around the world, not less.

We just talked about this at our live event yesterday. We’re listening to the market and getting more aggressive on the long side.

I somehow found myself in Bangkok presenting to a room full of traders for a CMT event a few years ago.

I remember thinking how much I wanted them to like me…

And worrying that they wouldn’t because I had nothing positive to say about their local markets.

The charts were just so bad. There was no way around it.

The Thai Baht and the SET Index had just completed fresh tops. These trends were undeniably lower.

And this was really the case for all the Southeast Asian countries we visited.

Malaysia, the Philippines, and Vietnam were in the middle of some nasty downtrends too.

I wish I had better news for everyone, but instead it felt like I was going from city to city announcing bear markets all over Asia.

I’ll never forget it. I literally felt bad. The people I met out there were trading these markets....

The greatest investor the world has ever seen announced his retirement this weekend. 

Warren Buffett delivered the news at the Berkshire Hathaway annual shareholders meeting on Saturday that he’ll be stepping down on January 1, 2026.

Naturally, this was the big story of the day. But all I keep hearing is that the stock is down 5% on the news.

You gotta be kidding me. 

JC and I have been joking for years that when this moment comes, you buy the dip. And now that it’s here, we’re doing it.

So, let’s tell the real story of Buffett and Berkshire shares these days.

What all the headlines aren’t telling you is that Buffett literally just went out on top in the most GOAT fashion. Let me explain…

Berkshire closed at fresh all-time highs Friday.

Only a handful of stocks in the S&P 500 could say the same.

The market just suffered a swift and steep drawdown. It's the worst of the entire cycle. A lot of stocks have been absolutely crushed. But not this one. 

Not only that, but BRK also recently made...

One of the things I do on Saturday mornings is catch up on the earnings stories and reactions I might have missed during the week.

And it’s actually a lot easier for me to do these days…

Over the past year, we’ve built an earnings engine complete with various internal scans and custom indicators.

We like to build the tools we need here at All Star Charts. It’s how we got our start many years ago. And it will always be a big part of our culture and success as a publisher.

So I’m proud to say we finally have everything investors need from an earnings standpoint.

And you can get it for free right now as we’ve launched a demo version of what we call the Beat Report. 

We’re tracking all the reports each quarter and identifying the names with the best earnings trends and momentum. We send a note each day detailing all the earnings-based movers and shakers. We break it all down for you and highlight the best stuff we find. 

But the way we do it is a bit non-traditional. No one else is doing this analysis in this way. 

We don’t care so...

From the desk of Steve Strazza

The evidence is becoming clearer and clearer by the day…

It’s time to be overweight US tech stocks again.

But, this can mean a lot of things.

For me, Amazon and Tesla are “tech.” The big communications stocks are definitely “tech.”

There is some “tech” sprinkled into just about every sector, you just have to find it.

As a general rule, if it trades like a tech stock, it’s probably a tech stock.

Anyways, these are the stocks I’m on the hunt for these days. 

I’m buying speculative growth names like AST SpaceMobile and Rigetti Computing.

I’m buying bitcoin and crypto-related plays like MicroStrategy and Mara.

I’m buying biotech stocks like Rythm and Soleno.

From the desk of Steve Strazza

April will go down as one of the most volatile months in stock market history.

At the lows a few weeks ago, the S&P 500 was in a 20% drawdown. Fast forward to today, and after finding support at the prior cycle highs, the index has already rallied 17% off the bottom.

They call it a fast market. There's no doubt about that.

But more importantly, it's starting to feel like a bull market again.

The major averages reclaimed their VWAPs from the all-time highs earlier this week, and now we're seeing bullish follow-through.

As long as these moves stick, it's looking more and more like a V-shaped recovery out here. And that means it's time to get more aggressive. 

Throughout this correction and subsequent...

With four of the Magnificent 7s reporting earnings the next two days, big tech is front and center.

I’m talking about the largest and most important companies in the world.

These mega cap growth stocks have grown so massive that they do most of the driving when it comes to the performance of the major averages.

The S&P 500 won’t be in a bull market if too many of the stocks in the trillion-dollar club are in downtrends. It’s just math.

Alternatively, the S&P is going to look great if Microsoft, Meta, and friends are in uptrends… even if market internals are weak beneath the surface. 

The bottom line is that when it comes to the US stock market, these are the heavyweights. You can’t have a bull market without them.

The Mag 7s currently make up over 30% of the S&P 500 and more than 40% of the Nasdaq 100.

The three largest - Apple, Microsoft, and Nvidia - are all tech stocks. So it stands to reason that...

US equities are officially the laggards of the world.

The S&P 500 is underperforming just about every stock market around the globe this year.

After four months of steady underperformance, a growing list of international indexes are making new 52-week highs relative to the US.

While these ratios might be stretched over the short-term, when you zoom out, they are taking the shape of primary trend reversals.

All this tells us is to expect more leadership from international stocks in the future. I think we should get used to a global market of stocks that is no longer dominated by the United States.

And this is great news. Participation broadening around the world simply means more investment opportunities for us.

So I’m all about international these days. The first watchlist and chartbook I’m looking at most mornings is our international ETF universe. 

The bulls are saying its global rotation, and the bears are saying it won’t work without US stocks.

Both takes make sense. But, they’re just takes. 

Here’s where we are…

Stock markets around the world experienced fierce selloffs back in March. 

Then in April, this bearish action was followed by some of the most historic rallies in recent history.

There was broad participation to the downside. And now we’re seeing the same in the opposite direction. We’re in the middle of a synchronized global rebound rally.

And every country, region, factor, sector, and industry group looks different. They all come with their own unique characteristics in terms of how much they sold off, how resilient they were, and now, how strong they are, measured by the bounce.

So, while some things obviously look better than others, and some groups still look...

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There is a real power to always staying open-minded.

We can’t be dogmatic with our approach or our positions on the market. It’s dangerous.

The data is always changing, and we need to be nimble and ready to change with it.

That brings me to the point I’ve been thinking about more than anything lately.

I think it is absolutely imperative that we remain open to the possibility of a v-bottom.

While there is plenty of data that suggests this is more likely to be a prolonged bottoming process… there is also a growing amount of evidence indicating we could rip right back to where we were.

I mean, it’s already happening overseas.

MSCI country indexes like Germany, the United Kingdom, Japan,...

I’ve been pounding the table on Brazil lately.

I can’t remember a time in my career when I thought about these stocks so much.

One of the first things I do every morning is check the BRL/USD pair and Bovespa.

That tells me all I need to know about how my Brazilian ADRs are trending. I’ve built positions in a number of them just recently.

Some are doing well, others like PBR and VALE, not so much.

But, here’s the thing. Investors are dumping their USD exposure and looking around the globe for new opportunities.

I think this has a lot less to do with trade war narratives and rumors, and a lot more to do with the fact that the US has dominated the investment world for a decade and a half.

America has been the only game in town for anyone looking to generate alpha. 

Of course, it couldn’t last forever. 

Stocks around the world are dirt cheap compared to the premium multiples found here.

For example, my two favorite Brazilian ADRs are trading at single-digit P/E multiples right now. 

...

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First of all, congrats to Goldman Sachs, now the largest component in the Dow Jones Industrial Average.

The last time a bank headlined the Dow was JP Morgan back in 1998.

That’s pretty cool, but that’s all it is. Just a fun fact.

I would say it’s a sign of the times that a tech stock didn’t fill the shoes of UNH, but the Dow is a bit funky in the sense that it is price-weighted instead of cap-weighted.

Speaking of Papa Dow, let’s talk about what’s next for the major averages following the latest beating for US equities.

All the large-cap indexes violated their VWAPs anchored from the April 7 pivot lows this morning. They all tested these levels and held just last week. 

That’s been the line in the sand for me as far as a retest of the lows is concerned. 

With every day the S&P, Nasdaq, and Dow are below these VWAPs, the higher the likelihood we’re headed back to the lows...