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

There's been a subtle risk-on tone in recent weeks. With each passing day, it's been spreading to more and more markets and charts.

Rates are rising around the globe. The underlying uptrend in commodities is intact and looks ready for another up leg. Our equal-weight commodity index is resolving higher from its current range. And cyclical stocks such as energy and financials are breaking out to new highs.

All of these events speak to a growing risk appetite and support higher prices for risk assets.

Although, two areas where we aren't seeing such clear evidence that risk-seeking behavior is re-entering the market would be currencies and our intermarket ratios.

The AUD/JPY cross is still stuck within a range. High-yield bonds $HYG relative to their safer alternatives -- US Treasuries $IEI -- failed to hold their recent highs. And the copper/gold ratio is a hot mess.

We would expect to see decisive upside resolutions from these charts if investors are positioning for another leg higher...

From the desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money.” Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

By adding our technical analysis...

From the desk of Willie Delwiche.

The cyclical weight of the evidence tilts toward opportunity.

Our tactical risk management model remains constructive even in the absence of a breadth thrust (though such an event would certainly help the bullish case). 

While not doing much from an asset class perspective, we have made some changes in our dynamic portfolios. Highlights include:

• Getting more constructive on Europe and the new highs coming from the UK. 
• Shortening the duration of our fixed income holdings as we start to upward pressure on interest rates.. 
• Making a clean (Technology-related) to dirty (Materials-related) rotation in our Tactical Opportunity portfolio. 

Overall we continue to position these portfolios not for what could or should happen but consistent with the message of the market and an eye on what is happening.

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 Under the Hood column, where we'll cover all the action for the week ended January 7, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

...

From the desk of Willie Delwiche.

Key Takeaway: Bonds make good on their resolution to take rate hikes more seriously. Breadth thrust prospects are fading but global resiliency is encouraging. Fed will be late to the rate hiking party and so recent tightening cycles may not be as relevant.

• Sector-level volatility is producing big swings in relative strength rankings. Thanks to a double-digit positive weekly return (while the median sector was down), Energy surged to the top of our rankings, followed by Consumer Staples in the number two spot. 
• Financials also surged in the rankings and joined Staples and Energy in making new highs last week.
• Health Care, Technology and Consumer Discretionary all plummeted in the rankings, with weakness being seen across various capitalization levels.

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.

Commodities Keep Cruising

Despite copper remaining range-bound and the CRB index stuck below its October highs from last year, our equal-weight commodity index hit fresh 8-year highs last week. This speaks to broad participation and strength among commodities, and is supportive of our view that a new commodity supercycle is upon us. This index making new highs is also excellent confirmation of the breakouts in the US 10-year yield, and energy and financial stocks. We think these areas of the market will continue to do well. Though we’re definitely not out of the woods, we are beginning to see signs that the market is finding its way. Our equal-weight commodity index at its highest level in eight years is definitely one for the bulls. After a prolonged period of consolidation in 2021, we think commodities are ready to make a fresh leg higher.

...

On days and weeks like this, I love to look for opportunities to sell premium into the elevated implied volatilities we're seeing rising across the board. With $VIX back up above 20, you'd think there's been plenty to pick from.

Problem is, I haven't found any delta-neutral setups that look good today. Too many busted charts on the most liquid ETFs makes finding support levels that both make sense and offer enough premium to make it worthwhile from a safety standpoint hard to find.

So, as always, I reached out to my team from some other ideas.

We've been asking the question: "how bad can things be if we're seeing this kind of relative and absolute strength in the banking and financial sectors?"

Steve Strazza served up an interesting bullish play that is either a gift of a pullback, or we're buying the top. If you're market the bullish, then you gotta believe this idea has merit.

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 this week as 68% of our list closed lower with a median return of -0.71%.
• The US 10-Year Yield $TNX was the winner, gaining about 26bps on the week.
• The biggest loser was Russell 1000 Growth $IWF, with a weekly loss of -4.84%.
• There was a 4% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 51%.
• 21% of our macro list made fresh 4-week highs, 13...

We've been talking a lot about the differences between Nasdaq stocks and how other indexes are weighted.

With the Nasdaq running up into key resistance vs the S&P500, confirming a bearish momentum divergence, I think it's important to reiterate why:

Over the last few weeks, we've been pointing to the growing leverage in the derivative markets exacerbating volatility.

In our last report, we also outlined how we're anticipating this to unwind in the coming weeks. This continues to be the key theme for the first quarter.

Additionally, a variety of metrics suggest the market is strongly in oversold conditions, offering a favorable level for long-term investors to add to spot positions.

Meanwhile, derivatives and macro conditions present a headwind for speculative dip-buyers.

Infrastructure has been coming up quite a bit among the strong names. So today's trade selection is a long setup in a chemicals stock.

Let's take a look at what we have today!

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.

Do you think the world is coming to an end if Financials are breaking out to new all-time highs?

The answer is no.

If America's most important sector is leading the way higher, then that probably speaks to more continued rotation, not massive distribution.

Sure, some sectors are getting hit.

Some sectors got hit last year too. Most of them did at some point actually.

But if you recall, when some stocks were struggling, there was always another group coming in to pick up the slack.

In this case, it's arguably the world's most important sector:

For me, less is more.

I want to be able to see what's actually going on. Not get bombarded with all sorts of lines and colors.

Price is the only thing that pays anyone. So let's focus on that.

Here's how I see it:

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:

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs that did not make the market-cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It’s got all the big names and more -- but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let’s dive in and take a look at some of the most important stocks from around the world.

Before we get into it, let's take a look at how our International Hall...

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

Crude oil bulls are back in town!

They kicked the year off by pushing price back above 76 and reclaiming the upper bounds of a multi-year base. Oil is the most important commodity in the world, so it’s hard to overstate just how bullish fresh seven-year highs would be. 

But we’re not quite there yet. We still need to take out the fall highs. 

The 76 level marks the former 2018 highs and the breakout from a massive reversal pattern. Buyers ran into an overwhelming amount of supply here during the back half of 2021. When they did manage to reclaim those former highs, it was short-lived, and the move quickly failed. 

But the move was more of a false start than a failed breakout. We’re back above this level again today.

Now that the bulls are back in the driver’s seat, can we expect to finally see crude oil at 100 in the coming weeks or months?

It’s very possible -- especially given one key development in recent weeks…  

Energy stocks are on fire! This is the best...