We've adjusted a position in the Paid-to-Play portfolio today:

It's no secret.

Crypto and legacy markets have traded together for some time now. Apart from the recent lack of volatility in the former, it's all been one market.

We don't need to overcomplicate this.

Just look at the ratio of the High Beta ETF $SPHB against the Low Volatility ETF $SPLV overlaid with Bitcoin since the onset of the pandemic. They look pretty similar, right?

From the Desk of Kimmy Sokoloff

Volatility reigns, and it surely proved itself yesterday with the massive drop in the indices starting around 2:45 p.m. ET.

To me, the S&P 500 would have to get above and stay above 3,667 and the $SPY above 365.50 for this market to trend higher.

Otherwise we can continue lower. SPY support is at 360, then 358. Resistance is at 364.

Cathie Wood's ARK Investment Management is on our list today, as the ETF provider just filed 13Gs for two of its healthcare holdings.

In one of the filings, ARK reported a 10.64% stake in the genomics outfit Ginkgo Bioworks $DNA.

ARK also revealed an increase in its ownership of CareDx $CDNA, from 6.89% at its last filing in February to 10.83% today.

We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that guides us toward the very best stocks in the market. We have incorporated our stock universe of Nifty 500 as the base this time around. Among the 500 stocks that we follow, this scan will pump out names that are most likely to outperform the market.

From the Desk of Kimmy Sokoloff

Starting at 11:00 a.m. ET, the market started to gain some traction and trended higher from the morning lows.

A little before 3:00 p.m., news from the Bank of England sent the indices all the way back down to the lows.

A round trip, to say the least...

From the desk of Willie Delwiche.

The trend for bonds has been lower for two years, the trend for stocks turned South earlier this year and the trend for commodities rolled over last week.

Why It Matters: If the past pattern holds, the next trend change will be for bonds to turn higher. It’s hard to envision that with so much upward pressure on yields (in US & around the world). But if there is an unloved and under-owned asset, its bonds. 

In taking a Deeper Look we look at why it may still be too early to get aggressive on bonds even though that is where we are likely to see leadership emerge.

From the Desk of Ian Culley @IanCulley

One of the most valuable tactics I’ve learned in my career is the ability to capture a strong trend as it’s trending. 

I’m not talking about FOMO buying or blindly chasing breakouts.

In my experience, buying strong trends requires patience and discipline. 

Today, exercising these two key traits is especially necessary if you're trading the explosive US dollar. 

Navigating the latter stages of the dollar rally presents challenges, particularly in dealing with heightened volatility. However, it doesn’t mean we can’t join in on this trend responsibly as it barrels down the tracks... or, in this case, up them.

Crypto markets will be forced into making a decision sooner rather than later. Bitcoin's price stability just reached two-year highs.

Considering the mean-reverting nature of volatility, it's only a matter of time before this tight range resolves.

We've adjusted a position in the Paid-to-Play portfolio today:

From the Desk of Kimmy Sokoloff

As of 6:00 a.m. ET $SPY was trading at 356, below the most recent low of 357. We have since bounced.

As we know, this can all change by the time the market opens.

You know me by now, I prefer to look underneath the surface to see what's actually happening in the markets every day.

The headline number of, "What did the Dow do today" doesn't tell the full story.

I'm more interested in the performance of the individual sectors. Which types of stocks are leading and which ones are lagging?

When it comes to accumulation by institutions, it's easy for them to buy as much of the mega-caps as they want.

It's hard to leave your footprints with such massive market caps and liquidity levels.

In Small-caps, however, it's hard NOT to leave your footprints, especially for the largest financial institutions.

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

This week we're looking at a stock from the Leisure sector. Stocks from this sector are in strong momentum.

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

This is one of our favorite bottom-up scans: Follow the Flow.

In this note, we simply create a universe of stocks that experienced the most unusual options activity — either bullish or bearish, but not both.

We utilize options experts, both internally and through our partnership with The TradeXchange. Then, we dig through the level 2 details and do all the work upfront for our clients.

Our goal is to isolate only those options market splashes that represent levered and high-conviction, directional bets.

We also weed out hedging activity and ensure there are no offsetting trades that either neutralize or cap the risk on these unusual options trades.

What remains is a list of stocks that large financial institutions are putting big money behind.

And they’re doing so for one reason only: because they think...

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

And it doesn't have to be a Russell component — it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to...

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Industrials Are Island Hopping

his is a zoomed-in look at the trailing month and a half of price action in the Sector SPDR Industrials ETF XLI. Industrials have the tightest historic correlation to the major averages in the US, so the index provides valuable information for the overall equity market. 

Industrials just printed a failed reversal pattern, making for an excellent illustration of the choppy and trendless environment we’re in.

Earlier in the month, XLI launched higher from an island reversal formation. However, there was no follow through and the move immediately stalled. Friday, prices gapped right back into their old range, forming yet another island reversal. 

We’re watching the pivot lows around 82.75. If we take those out, we’re likely to get a fresh leg to the downside. This is not just true for Industrials, but the broader market.

...

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

• This week, our macro universe was positive, with 70% of our list closing higher with a median return of 1.46%.
• Oil $CL was the winner, closing with a 16.54% gain.
• The biggest loser was Dow Jones Utilities $DJU, with a weekly loss of -2.82%.
• There was no change in the percentage of assets on our list within 5% of their 52-week highs – currently at 6%.
• Only 11% of our macro list made fresh 4-week highs.
• ...

From the Desk of Kimmy Sokoloff

This market is not for the faint of heart. It'll whipsaw you around, so you must be diligent. Failing that, it's best not to trade.

Just because I'm taking a trade doesn't mean you have to. 

Running Out of Energy

A 14% rally in Energy last week (its 3rd best weekly gain in at least the past 30 years) was not enough to keep the long-term in the Energy sector from rolling  over last week. This follows the down-turn in the long-term trend in commodities that we discussed last week. 

The Details: The longest sustained up-trend in the Energy sector since prior to the Great Financial Crisis has ended. The trend for the Utilities sector also turned lower last week. For the first time since the COVID crisis none of the 11 sectors in the S&P 500 are currently in up-trends.  

More Context: Energy has been an island of green surrounded by a sea of red this year and is still up nearly 50% YTD. But over the past 30 years, all of the net gains for the sector have come within an established up-trend. With the trend rolling over, investors looking for safe harbors have even fewer options...