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Saturday Morning Chartoons: Buy High & Sell Higher

November 13, 2021

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:

 

 

[PLUS] Weekly Observations & One Chart for the Weekend

November 12, 2021

From the desk of Willie Delwiche.

I’m no crypto expert - I don’t even play one on TV. But every week seems to bring a new story about ways in which cryptocurrencies will not only stick around but see wider usage in the economy and as financial instruments. I have no idea if this will be the case, but new highs this week in Ethereum (and others) suggest the market is looking in that direction. Whether it is an investing fad, gold for a new generation of investors or an entirely new asset class remains to be seen. A survey published by Pew Research this week shows that while nearly half (43%) of males 18-29 have invested/traded/used cryptocurrencies, only about one-sixth of the overall US adult population has done so. So if it is sticking around, it could very well still be early days for this space. We’ve dipped our toes in this water, using ETHE to gain exposure in our Tactical Opportunity Portfolio. It’s been volatile this year, but the trend (which we are following) has been up and to the right. Regardless...

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International Hall of Famers (11-12-2021)

November 12, 2021

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 50 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs from countries 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 50 largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

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

Here’s this week’s list:

...

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Playing a Post-Harvest Rally

November 12, 2021

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

Commodities are streaking higher, providing plenty of alpha across the entire space to anyone who can pry their eyes away from their altcoin charts.

Cotton and coffee continue to rip. Crude oil and the energy space are grinding higher. Live cattle are breaking out. Even precious metals are starting to catch a bid.

But what about the grain market? Last week, we pointed out that our Minneapolis Wheat position had hit our target and that it was time to feed the ducks.

Today, we’re going to highlight a couple of grain contracts we want to keep on our radar for buying opportunities in the coming weeks and months.

Let’s dive in!

First up is the March 2022 corn contract:

Like many other cyclical assets, corn futures peaked in May and have since been chopping sideways in a broad range. As the consolidation continues to develop, price has repeatedly found...

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Risk Checklist Review

November 12, 2021

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Everything's falling into place for the bulls.

Mid-caps and small-caps finally joined their large-cap peers at new record highs earlier this month. A bullish expansion in breadth is confirming these breakouts at the index level.

We're also seeing strong confirmation in the form of other risk assets resolving above key levels of interest.

As suspected, our risk checklist has moved up to its highest level since we began tracking it this summer. This list does an excellent job summarizing the global landscape.

Here’s a look at where things stand presently:

What we’ve done here is pinpoint critical levels in some of the most risk-on markets and relative ratios in order to gauge the current level of risk appetite.

Whether these charts are above or below our levels is...

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[Options Premium] Fading the Vol in Consumer Discretionary Stocks

November 12, 2021

Well, once again we saw a little downside action this week and the noise-makers on the twitter and the teevee got all revved up. Cool. Whatever drives clicks, you maniacs.

Meanwhile, those of us who keep our heads about us while others are going insane are looking for opportunities to sell some premium into the somewhat elevated volatility premiums we see in options during times like this.

So, I did my periodic scan across the ETF landscape to see which sectors were sporting the highest relative implied volatilities while also showing the potential for rangebound activity over the next several weeks.

And I like what turned up...

Gold Hits New 52-week Highs?

November 12, 2021

Yes you read that right.

New 52-week highs in Gold, but only when priced in Japanese Yen.

Regardless, the worst investment you could have possibly made in the summer of 2020 could now be the best investment you can make for 2022.

But really? Is Gold in Yen terms making new 52-week highs enough to get bullish precious metals?

Wall Street’s Greatest Lie

November 12, 2021

Someone somewhere a long time ago, before I came around, started telling people that to be a successful investor you should "Buy low and sell high."

The nerve of some people to have such an ego to think they can consistently buy low and sell high....

Are you kidding me?

Markets trend!

A Holler to the Dollar

November 12, 2021

Is it a million-dollar question? Or a billion-dollar question?

Actually, it's just a Dollar question. The millions and billions will come later.

The Dollar Index has been doing something that's worth noticing and we're here to discuss just that.

So what do we know of the Dollar index?

We know that it's a risk-off indicator.

We know that it has an inverse relationship with stocks and commodities (for the most part).

We know that a breakout/breakdown can be crucial in any market condition.

So what is it really that the Dollar Index is doing?

Breadth Thrusts & Bread Crusts: Stillness Can Be the Riskiest Decision

November 11, 2021

From the desk of Willie Delwiche.

After my daughter’s flight landed in Minneapolis, she had to hurry through the terminal to catch a bus for the ride that would complete the final leg of her trip back to college. She did a great job of navigating uncertainties and asking for directions. She went where she was told and saw people, but no bus. "Just wait here," she was told, "the bus shows up, you get on, and it leaves right away."

A couple of buses came, some people got on, the buses left. Meanwhile, her ride was still a no-show. 

But people who appeared to be in-the-know said she was in the right spot. 

So she waited.

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The Weak Hands Shakeout

November 11, 2021

Yesterday, there was plenty of action.

In the morning, the uptick in the CPI pushed Bitcoin immediately higher.

Throughout this short period, open interest spiked higher as longs jumped into late positions. This combined with FTX going offline contributed to a perfect storm for a minor shakeout of over-leveraged longs.

Despite this choppy action yesterday, this doesn't sway our bullish thesis.

 

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Will the 30-Year Hold?

November 10, 2021

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

Last week, we touched on the weakness that’s been developing further out on the yield curve.

The long end simply hasn’t kept pace with shorter-term yields. This is understandable given the magnitude of the move in the 30-year since summer 2020. At some point, the shorter end of the curve needs to play catch up. And it’s done just that these past couple months.

Now it’s time to focus on longer-term rates, as further downside pressure will eventually put the current economic recovery into question.

Let’s put the recent action in rates into perspective as we head into year’s end.

Below is a chart of the US 30-year yield:

After testing a key level of former support turned resistance around 2.23, it’s slipped back toward its summer lows.

If the 30-year yield continues to fall and takes out its former lows around 1.78 that does not bode well for...

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2 to 100 Club

2 to 100 Club (11-10-2021)

November 10, 2021

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there. We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this...

[PLUS] Weekly Sentiment Report

November 10, 2021

From the desk of Willie Delwiche.

Key Takeaway: The bulls are back as more and more investors begin to reach for risk. Optimism is expanding across investor surveys and active equity managers have increased their exposure to levels not seen since the beginning of the year. This fresh bout of risk-seeking behavior comes as both momentum and price trends have turned bullish. Also, participation beneath the surface is expanding as the major indexes reach record highs. Combine this backdrop with a healthy number of stubborn bears and we have an environment that supports the next leg higher.

Sentiment Report Chart of the Week: Appetite For Risk Returns

Investors are not just feeling more optimistic, they are doing something about it. NASDAQ trading volume, which fell by nearly 30% from March to October, has turned higher in recent weeks and is 20% higher than it was this time last year. Equity call option activity has also expanded as investors are stepping back up to the ‘risk on’ buffet after a multi-month...

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Revisiting Crypto Stocks

November 10, 2021

We've made our thoughts clear that if Bitcoin is above 65,000, and the signs of on-chain buying pressure remain intact, upward volatility expansion through price discovery toward 85,000 remains the most probable outcome.

The beneficiaries of such a move would be widespread - down the cap scale of altcoins, and even in the individual stocks that are making crypto an increasing part of their operations.

So let's revisit how we're approaching the stocks in the crypto space, and identify the levels we're watching to manage risk and to take profits along the way.