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...

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...

With VIX closing the day today north of 30, I'm still on the hunt for premium selling opportunities.

So as always, I perused my list of the most liquid options ETFs and found an opportunity where premiums are elevated and the chart suggests some rangebound trading action is likely over the next few weeks.

The day got away from me so I didn't get a chance to put it on yet, but I've identified a delta neutral candidate that I'll be looking to enter in the early going tomorrow AM.

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.

High Yield Holds The Line

Below is a chart of the S&P 500 overlaid with the High-Yield Bonds versus Treasuries ratio. HYG/IEI is one of our favorite ways to analyze risk appetite. As you can see, the ratio has been building a topping formation since last year and has threatened to violate the lower bounds on many occasions. Last week was no exception as we saw more selling pressure, but ultimately, buyers regained control and successfully defended this level. Seeing this relative trend hold is solid evidence that this is a tradable low for US equities.  Falling prices for the HYG/IEI ratio tends to coincide with volatility for risk assets while a rising ratio is normal during bull market environments. Since last year, this ratio hasn’t given us much information as it has been trending sideways in a range. But with so many risk assets resolving lower recently, the fact that it continues to hold its range is one...

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 green as 60% of our list closed higher with a median return of 0.44%.
• Lumber $LB was the winner, closing with a 3.34% gain.
• The biggest loser was Emerging Markets $EEM, with a weekly loss of -2.81%.
• There was a 9% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 26%.
• 21% of our macro list made fresh 4-week highs, 9% made new 13-week...

From the desk of Willie Delwiche.

Key Takeaways:

• In an effort to fight inflation, the Fed is likely to accept volatility but will be wary of stress.
• Equity market trends are deteriorating.
• Preserve capital and sanity - market doesn’t hand out participation medals.

Offsetting this likely need for more aggressive tightening is the potential for sanctions to strain the financial system in unexpected ways. When liquidity gets disrupted signs of stress can emerge. A widening in high yield spreads and/or a breakdown in the ratio between high yield bond and Treasury ETFs would be evidence that volatility is morphing into stress. That could slow the pace at which the Fed tightens and in the process worsen the problem of inflation.

Since last week's report, war has broken out between Ukraine and Russia.

This has been the dominant driver of recent price action in risk assets, Bitcoin and crypto included.

We're still positioned heavily in cash, with little crypto exposure.

Particularly with the geopolitical volatility we've seen over the last week and the resulting impact on global markets, this remains an aggressive tape to be actively trading.

Sitting out remains the most prudent option for the vast majority of traders.

If the world was coming to an end, and stocks all over the world were about to collapse, then these 3 charts would likely not be going up.

If the argument is that the relentless selling was limited to overexposure in US Growth Stocks, then these 3 charts should continue to rise.

The first one is Berkshire Hathaway. Tell me this isn't an uptrend:

It's hard to ignore the fact that some of the worst stocks on the planet are near old support levels.

One group that stands out for sure are the Marijuana stocks. We've seen a ton of activity from C-suite executives buying their own company's stocks recently. And not just exercising options, but going out in the open market and buying the stock just like you or I would.

Look at the Alternative Harvest Index Fund all the way down to those former lows from early 2020:

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:

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Tuesday March 1st @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Tuesday evening:

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

Commodities have been on a tear to start the year.

The CRB Index is up almost 16% year to ate, while our equal-weight commodity index is up 9.5%.

But, with such explosive moves over the past few months, we think it might be time for some corrective action.

Our commodity indexes and a handful of individual contracts are now testing potential resistance levels.

Though we still think this bull market has plenty left in the tank, it’s starting to look like commodities are due for a break over the short term.

Let’s discuss some of these charts now.

First up is the CRB Index:

The benchmark commodity index is running into an area of former support at the 2012 and 2014 lows, coinciding with a key Fibonacci retracement level measured from the 2011 peak to the 2020 lows.

The CRB Index has been on a tear, posting 10 straight weeks of higher closes....

From the desk of Steve Strazza @sstrazza

We've been joking internally that the new highs list is a lot longer when you include ADRs.

As US stocks come under increasing pressure and the rotation into value becomes more pronounced, international stocks are garnering some well-deserved attention.

We recently wrote about some of our favorite regions around the world and discussed bullish setups in a handful of international country ETFs, with a heavy tilt toward value.

We also have a bi-weekly scan where we focus exclusively on the largest ADRs, which are just foreign companies listed on US exchanges. It's called the International Hall of Famers, and you can check it out here.

The only problem with it is that a lot of the cyclical stocks that are showing leadership have smaller market capitalizations, and our universe is focused only on large caps.

As such, we thought we'd run a scan to identify some of the strongest international stocks between a market cap of $1B and $35B.

...

From the desk of Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that, which you can check out here.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

And here’s how we arrived at it:

• We filtered out any stocks that are below their May 10th 2021 high, which is when new 52-week highs peaked...

From the desk of Willie Delwiche.

It was certainly a busy week filled with volatility-inducing headlines that produced sharp sell-offs and stunning reversals. And all in just four trading days. Stepping back from the noise, it can be helpful to take stock of what has changed and what has not. One of the things that has not changed, is that on the NASDAQ new lows continue to outnumber new highs. It is true that there were fewer new lows on Thursday than there were at the January low. But for evidence of sustainable improvement, we don’t just want to see fewer new lows, but actually see more new highs than new lows. It has been 35 trading days since that has happened, the longest such stretch since late 2018/ early 2019 (and the second longest stretch since the financial crisis more than a decade ago). When this changes (and at some point it will) we can think about the NASDAQ from a more constructive perspective. Until then, it might be best to remember that the best rallies tend to occur within bear markets and those are best observed from the sidelines.

...

US Treasuries are off to their worst start in more than a decade as rates rise across the curve. 

The US Aggregate Bond ETF $AGG is down more than 4% year to date. Treasuries can’t manage to catch a bid. And High-Yield Bonds $HYG have fallen off a cliff.

But this could all change quickly. Especially if stocks continue to sell off. 

Money has to go somewhere as it flows out of equities. And with many bonds testing critical levels, it would make sense to see prices mean revert, at least in the near term.

Let’s take a trip around the bond market and discuss some of the key levels on our radar.

First up is the long duration Treasury Bond ETF $TLT:

After dropping 5.4% in the last three months, TLT has paused at a logical area of former support around 135. This the same level price rebounded from late 2019 and early 2021.

The last time TLT bounced off these levels was when many risk assets peaked back in May of last year. We’re watching to see if we get a similar reaction from markets this time around.

...

Wild market conditions persist!  Yesterday, stocks had a huge gap down opening, but then spent all day ripping higher and closed convincingly in the green. Today, the rally picked up right where it left off.

Talk about whiplash!

This makes it incredibly challenging to find directional bets with any degree of confidence. So, with implied volatilies elevated across the board, today we're hunting for another delta-neutral premium selling candidate.

And this time, we're doing it on an individual stock.

This is the video recording of our February 25, 2022, All Star Charts Crypto Weekly Strategy Session.

On today's episode I sit down with Financial Advisor Stephen Weitzel. Stephen and I have known each other for many years. We're both big fans of Technical Analysis, good food and college football. So this was a lot of fun!

Stephen walks us through his journey of first becoming a Financial Advisor, how helpful Technical Analysis has been for his practice and the journey towards $1 Billion in assets.

I've had a front row seat to Stephen's growth, both as a business owner and as a Technician. It's been really cool to see and I'm going to keep rooting for him and his team.

I always like to get different perspectives on the podcast, and I think this conversation is a great compliment to a lot of the other episodes we've done over the years.

Make sure to follow Stephen Weitzel on Twitter @stephenweitzel and check out Stephen's firm Reveille Wealth Management.

Enjoy!