Take-Two Interactive Software (TTWO) has Big BASE characteristics that have us prepared for a breakout.
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Glenn Close, John Malkovich, and Michelle Pfeiffer starred in the late 1980s period drama, Dangerous Liaisons, which was based on the 18th century French novel, Les Liaisons Dangereuses. It’s the title we’re interested in for this note, not the subject matter, because after listening to the Adam Posen (President of the PIIE) interview today of Fed Chair, Jay Powell we got a foreboding feeling. Actually, it wasn’t the interview that made us shiver. It was the sign off. Mr. Posen closed their chat like this -- “Thank you so much, Jay. We’re out of time and you obviously have a world to continue to save.”
It was a long time ago…in what seems like an alternate universe or another galaxy…when an analyst coined the phrase, “the banks are the market’s bodyguard and Citigroup is the most important stock in the world.” The line got a lot of play and – more importantly – the theme proved helpful because, as the chart here from that alternate universe period shows – when Citi failed (blue), the banks failed (white), and the S&P failed, (pink), too.
It was 1989 when the British duo Tears for Fears released an overtly political song, “Sowing the Seeds of Love.” The song was a reaction to Margaret Thatcher’s (Conservative Party’s) third election win in a row. Lyrics like “Politician granny with your high ideals, have you no idea how the majority feels?” made it clear to whom Roland Orzabal and Curt Smith were referring. We thought about the song today as we watched:
In a period filled with rare, remarkable, surprising and unique inputs the chart below shows another such example.
The Russell Growth to Russell Value ratio has moved to a new all-time high above the year 2000 peak. The momentum driving the ratio to the current level is not as dramatic as what occurred at the ratio’s prior high, but it’s still moving at a healthy clip. We’ve shown iterations of this ratio over these many weeks – Growth to Non-Growth, The Last Emperor, HAVES, etc. – and the conclusion remains the same, there are no signs evident that The Last Emperor is prepared to abdicate the throne.
Caterpillar (CAT) is weighed down by a superfecta-nova of negative technical inputs such that we’re expecting the stock will, at least, retest its March 2020 lows. The stock is fighting a losing battle technically as it is below its downward-sloping 50, 100, and 200-day moving averages, the RSI in the lower panel implies deteriorating near-term momentum, despite a near-50% rally in 20 days the RSI could not get overbought (this would’ve been a sign of strength), weekly momentum is decrepit and while monthly momentum is in negative territory it is not as oversold as it was in early 2016 or in 2009.