From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Despite the rising US Dollar Index, strength among commodity-centric currencies has been a key theme for much of this year. 

Today, that’s no longer the case.

The rally in the USD is accelerating, as dollar strength broadens to even the most resilient currencies. 

Two of the top commodity currencies – the Australian and Canadian dollars – are undercutting the lower bounds of their current ranges and making fresh 52-week lows.

These breakdowns mean the path of least resistance is now lower. If these are valid resolutions, we’re looking at increased headwinds for risk assets.

Let’s look at a couple charts of the AUD and the CAD, highlight the levels we’re watching, and discuss what continued weakness in these major currencies means for stocks and commodities.

First up is the Australian dollar-US dollar cross:

...

From the desk of Willie Delwiche.

A risk off environment persists. Leadership areas are coming under pressure as market correlations rise (as they typically do in periods of stress). We are reducing our exposure and move to the sidelines to ride out this period of volatility.

From the desk of Willie Delwiche.

It’s hard to get away from the crowd when you only ask the questions that everyone else is. When we ask better questions, we get more relevant answers. The questions being most asked right now focus on whether we are going into a bear market and whether we are seeing capitulation (“Was that the bottom?”).

• A bear market has been evident beneath the surface (at least since late 2021, but in some ways for over a year). It’s now showing up in the indexes. The Value Line Geometric Index is below its 2018 highs (as well as its Jan 2020 pre-COVID peak) and is in a 20% drawdown (the line in the sand many use to identify bear markets).
• I understand the allure of trying to call a bottom in real-time (or close to it). But I’ll let the market sort that out. The crowd, focusing almost exclusively on their favorite sentiment data, has been doing that all year and so far at...

The next new trade in our Paid-to-Play portfolio is:

 

The most significant insider transaction on today’s Hot List is a Form 4 filing by the CEO of Uber Technologies $UBER, Dara Khosrowshahi.

The Silicon Valley executive revealed a purchase of roughly $5.3 million of his own stock.

The selling pressure in stocks and other risk assets continues to persist.

What are we looking for to turn this thing around?

I sat down with Liz Claman yesterday on Fox Business to discuss exactly that.

This one is short and sweet. What are the key levels? Where are we looking for leadership?

If bonds catch a bounce, who will lead out of the hole?

The US Dollar is back up to its 2016 and 2020 highs.

On both of those occasions, the Dollar sold off and risk assets went on to do very well.

Is this time different?

Here's what it looks like:

The market remains in a volatile territory. We have just a few industry groups which continue to show relative strength. The defense sector is one of them.

Read on to know more.

From the desk of Steve Strazza @sstrazza

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 the stock is about to move...

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.

We recently decided to expand our universe to include some mid-caps…

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.

The way we did this is simple…

To make the cut for our new 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...

From the desk of Willie Delwiche.

Key Takeaway:

• Volatility is taxing investor portfolios
• Stocks reckoning with new liquidity regime
• New lows are expanding as selling pressure crescendos

Stocks remain weak and selling pressure has intensified. Risk On indexes are breaking down and the Risk Off environment remains intact. Some see volatility as the price of admission that investors need to pay to receive the long-term return potential in stocks. I see it as a portfolio tax that you are better off not paying. It should not be a surprise that in avoiding an equal number of the best and worst days in the market, portfolios experience less volatility and better returns over time. While we cannot hand select the days we want to avoid, we do know that the biggest up-days and down-days tend to cluster together in periods of market stress....

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 red as 70% of our list closed lower with a median return of -0.55%.
• The 30-Year Yield $TYX was the winner again this week, closing with a 9.30% gain.
• The biggest loser was the Volatility Index $VIX, with a weekly loss of -9.61%.
• There was a 2% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 13%.
• Only 9% of our macro list made fresh 4-...

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.

Losing Value

Markets have been selling off indiscriminately since last week. Even the strongest stocks are under pressure as we're seeing more and more indexes resolve lower from distribution patterns and violate critical support levels. An excellent example of this is the small cap value ETF (IWN). IWN has successfully defended its range lows for the past several months as its peers have broken down. Now that it has resolved to the downside too, we can add it to our growing list of completed tops. If the strongest can't survive and hold their levels, what does that say about the rest of the market? Long story short, this action is not bullish.

Another week and more elevated fears in the marketplace. The Nasdaq QQQ's breached the 300 level intraday today and that's got everyone chirping --- and for good reason.

Of course, the contrarian bird sitting on my shoulder has been uttering the phrase: "the wider the rubber band is stretched, the harder the snap back!"

Now, I'm not going out on a limb and declaring that the bottom for stocks is in and we rally from here. But I do like the odds of a viscous snap back rally materializing at some point this week. And if something like that were to come to pass, I want to be in names that have held up the best in this tape.

Today's trade is one such name.

 

I was talking to some people this morning about how you can technically say that Bitcoin is still in a structural bull market.

It really depends on your time horizon.

Because when you zoom out, the past year has been really messy. It looks like a big giant consolidation.

This can either be massive distribution and a major top, or it can be a consolidation within an ongoing uptrend.

Here's how I see it.

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.

The next new trade in our Paid-to-Play portfolio is:

Warren Buffett’s Berkshire Hathaway $BRK.A revealed more buying in Occidental Petroleum $OXY late last week.

In its latest 13G, the company reported a 21.6% ownership stake, which is roughly double its initial investment from earlier in the year.

As we progress into Q1 of Fiscal Year 2022-2023, this playbook outlines our thoughts on every asset class and our plan to profit.

This playbook will cover our macro view, touching on Equities, Commodities, Currencies, and Rates, as well as outline our views on the major nifty indices and the sector/thematic indices.

We also cover individual stocks we want to be buying to take advantage of the themes discussed in the playbook.

It's easy to get lost in the day to day noise of the market.

We're human.

Don't be too hard on yourself.

Understand that it's who we are.

Now, accepting that as a natural fault that we all have is step #1 to recovery.

There are steps we can put into place to help us overcome these emotions.