Last night went a little longer than I intended but I think it was necessary.

We had a lot to discuss. I hope you found that helpful.

Premium Members can watch the replay of our Live Video Call and download the slides here.

But this is what's on my mind: Is this US Dollar unwind just getting going? 

Is there anything more bullish for risk assets than the US Dollar falling apart?

This is the video recording of our February 1st Monthly Charts Live Strategy Session

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

Commodities and cyclical assets have remained resilient, defying headwinds from the US dollar for nearly a year. 

But the US Dollar Index $DXY is sliding lower as evidence mounts in favor of further weakness…

Could those headwinds soon fade away?

Today, we’re going to highlight some critical developments and discuss what they mean for the US dollar, stocks, and commodities in the weeks and months ahead.

Let’s dive in!

First is a chart of the US Dollar Index $DXY:

Its inability to hold above the November 2021 highs screams "failed breakout!"

After undercutting these former highs on Monday, we saw some downside follow-through on Tuesday. Two data points supporting a bearish resolution are commitment of traders (COT) positioning and momentum.

In the middle pane, we’ve highlighted commercial hedgers holding a stretched net short position...

I was chatting with an All Star Options member this morning and he asked me a very insightful question:

“Sean, I’d be very interested in your thoughts on why you choose not to make a trade in certain setups?”

He went on to elaborate that he’d like to know the things I look for that are possible “red flags” that prevent me from pulling the trigger in otherwise good stock setups.

The overwhelming majority of trades I put on for All Star Options subscribers are in stocks that the All Star Charts team has identified as stocks we want to be in (either long or short).

The most common reason I won’t pull the trigger is

From the desk of Willie Delwiche.

This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.

From the desk of Willie Delwiche.

A few weeks ago, we outlined our patient approach in the altcoins.

Our argument was as follows:

We’re approaching this market with a high degree of patience until a higher conviction setup has been formed.

This remains a messy, low-conviction tape to be positioned aggressively long.

Since then, most alts have trended considerably lower, and there's been little reason to be heroic in buying dips.

But, as we discussed in yesterday's note, there are a few bullish data points creeping in that could turn the tide for the alts.

Many names now sit at support, while others are in the process of putting in failed breakdowns sporting bullish momentum divergences.

In simple English, this is a good first stepping stone to carving out tradable bottoms.

It still cracks me up every time I hear that.

"German 10yr Yield is still dealing with resistance at zero".

Is it funny to you too or am I just being a child?

Anyway, joking aside, this is the first time in years that German 10yr Yields have been above zero.

Rates in general have been moving higher, not just in the U.S., but around the world.

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...

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 filters...

...And trading volumes are particularly good for the trading exchanges that make it all happen!

With the markets whipsawing back and forth to start the year and trading volumes rising all over the place, the exchanges that extract fees for every stock share, futures contract, or options contract that trade at their venues are seeing their revenues rise.

Couple this with some strong relative performance in the stocks, and we're setup for a very nice bullish move -- should we get it.

Today's trade is in a one such name that facilitates all kinds of trading.

From the desk of Willie Delwiche.

Key Takeaways:

• Trends turning flat as breadth becomes a headwind.
• Investors too scared to buy ETF’s suggests sentiment is a tailwind.
• On yields & rates: US is following, not the leader.

This more challenging trend backdrop comes at a time when bond yields are rising and central banks are tightening. On both of these fronts, the US is following global developments. The Fed continues to chase inflation, but at least at this point it's finally paying attention. Maintaining that focus could be a challenge if economic data continues to come in weaker than expected. Friday’s employment report could be a big test. US bond yields are off their highs, but breaking out around the world. German 10-year yields are trying to get...

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.

Testing Former Resistance

We've been pounding the table on the importance of defending the 2018 highs for a long time. These levels represent when risk assets peaked four years ago. The chart below shows the Value Line Geometric Index pulling back to its 2018 highs. This index measures the median stock performance and is an excellent way to view how the overall market is doing. Right now, it’s telling us that the average stock has endured significant damage and has erased almost all of the progress from recent years. Bulls really want to see these 2018 highs hold. If they do, the bias is still higher and the structural trend is intact. But if this level is breached, it will be a major bearish development for the broader market and risk assets in general.

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:

• Our macro universe was red as 64% of our list closed lower with a median return of -0.33%.
• US 10-Year Yield $TNX was the winner this week, closing about 4bps higher at 1.78%.
• The biggest loser was Lumber $LB, with a weekly loss of -10.39%.
• There was a 4% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 30%.
• 53% of our macro list made fresh 4-week lows, 34% made new 13-...

For a while now PSU Banks have been performing better than their counterparts-Private Banks. We have another name popping up from this sector.

Let's take a look at the trade for this week!

For some time, we've had a neutral outlook and have been in heavy cash positions.

There's been little change in our approach since the publication of our previous Monday report, but we have seen a handful of data points in favor of the bulls.

As we'll cover in today's report, the institutional capital that left in October is starting to come back in, and exchanges have seen a moderate outflow over the last week.

Moreover, traditional markets seem set up for a tactical bounce. What has been a headwind could be turning into a tailwind.

These are great first stepping stones toward a more constructive picture for the crypto market, but one of our two criteria for more aggressive long positions has not been met as of yet. That is:

• Bitcoin dips to 29,000;
• strength above 42,000.

This is a tape that still commands patience.

Let's dive in.

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.

It's much better living for stock market bulls if we're above those October lows.

Otherwise, I think you're just living on a prayer.

And why the October lows?

That's the last line of defense for the world's most important Indexes.

We have observed significant drawdowns across the market in the last two weeks.
Nifty 50 faced resistance at its October 2021 high which coincides with a critical Fibonacci extension. This time the index marked a lower high.

According to Dow Theory, the Primary trend is intact. Why is that? Because a lower highs and lower low would mark a negative trend. As long as Nifty50 sustains above 16,500, we could just as well see a market that consolidates.

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts: