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 in their direction and make them a pretty penny...

From the desk of Willie Delwiche.

Key Takeaway: Median stock has gone nowhere for six months. Emerging market trends are improving and commodities are moving toward new highs. Inflation weighing on consumer attitudes is a headwind for the economy.

• If shopping in the Energy (or Consumer Discretionary) sectors, look in the mid-cap aisles. The Energy sector is near the bottom of the large-cap sector rankings, but at the top of the mid-cap rankings.
• Improving relative strength trends for large-cap Food & Staples Retailing and Utilities bear watching as index-level volatility picks up.

As is often the case, the Labor Day Weekend has come and gone and some volatility has been reintroduced to the marketplace. And I say: "Welcome back!" with outstreched arms. Volatility = opportunity. Let's get after it.

With the rising volatility, we're seeing premiums start to pump up in options land. When this is the case, I always start hunting for some delta-neutral credit spread opportunities.

Today's hunt has yielded an excellent candidate with clearly defined levels for us to lean against. 

From the desk of Steve Strazza @Sstrazza

Welcome to our latest "Minor Leaguers" report.

We've already had some great trades come out of this small-cap-focused column since we launched it late last year and started rotating it with our flagship bottoms-up scan, "Under The Hood."

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

For about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but we think it’s time we branch out a bit and allow some new stocks to find their way onto our list.

The way we’re doing 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 are applied. Then, as always, we sort by proximity to new highs in order...

In traditional markets, we've been making the case that they've been a big fat mess.

So with all things considered, the alpha taking place within crypto has been catching our attention. But even this asset class has succumbed to the choppy action experienced elsewhere.

The bottom line is that if Bitcoin's below 46,000, the probability of success in new long positions reduces.

Looking more tactically, 44,000 is another critical inflection point. Not only does this conjuncture represent the 38.2% retracement from the recent thrust higher, but also the AVWAPs from all-time highs and July lows, as well as the 50-day moving average.

If we hold above 44k, things are likely not completely falling apart, and though the near-term trend is still choppy, there will still continue to be winners under the surface.

Alternatively, if we're below 44,000, the risk is well defined for a tactical short back to 41,000, which represents Bitcoin's June highs. We'd anticipate a...

This week we’re looking at a long set up in the Industrial Manufacturing sector. We're seeing a good move here as more stocks break out from their overhead supply zones.

Here's another one that has grabbed our attention.

We retired our "Five Bull Market Barometers" in mid-July last year 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.

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 context of the big picture 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 list experienced widespread weakness this week as 81% of assets closed lower with a median return of -1.29%.
• The VIX index was the big winner, closing out the week with more than a 27% gain and registering fresh 13-week highs in the process.
• The biggest loser this week was Lumber, falling -7.13%
• This week, we saw a 6% drop in the percentage of assets on our list that are within 5% of their 52-week highs (...

From the desk of Steve Strazza @Sstrazza

Our Top 10 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.

When the market provides us mixed signals, we dive beneath the surface to find more clues about the current environment. Here's the S&P 500 relative to U.S. Treasury Bonds, with the Russell 2000 overlaid. Note the similarity between them during the past year. When comparing stocks vs bonds it tells a story of not just where the alpha is but also how market participants are behaving. Similar to strength from small-caps, the ratio is a great gauge of risk appetite. Hence, why they look the same.

SPY/TLT tried to break out this week, but couldn’t quite get it done. As long as these charts continue to be trapped in their sideways ranges, expect more messy action for equities and risk assets in general. But, if and when we get upward resolutions, be ready for a more risk-on environment.

If there has been any alpha anywhere in this market, it's been in Crypto.

We don't care where the trends are. We just want to participate in them. They can be in Stocks, Energy, Metals, Euro, Crypto, doesn't matter.

I stopped caring a long time ago.

Here's Cardano reminding us what polarity is all about:

How much longer is this market going to be a mess?

Probably longer than you want it to be.

Why do you think defensive assets stopped going down 5-6 months ago?

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 and Grant Hawkridge @granthawkridge

It’s been a while since we checked in on the US breadth scene, and for a good reason… there’s really nothing new to say.

Some US stocks are going up, but most are not.

Instead, our focus has been on expanding global breadth. We believe the burgeoning participation in international markets is constructive for US markets, specifically for cyclical areas. 

But are we beginning to see any signs of breadth expansion domestically? 

In today’s post, we'll switch gears and turn our attention stateside to address participation among US stocks.

Let’s dive in!

Here’s a look down the cap scale at all three S&P indexes, from large to small:

There's been literally no material move in the number of new...

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

Industrial metals have been one of the strongest subgroups within the commodity complex over the trailing year. 

The parabolic advance in Steel futures off last year’s lows is an excellent illustration of this.

But lately, we see more and more commodities shift toward sideways trends in the intermediate-term. And lots of them are doing so trapped beneath overhead supply. 

A quick glance at charts like crude oil or copper tells this story well -- the last four months have been a chop fest for most.

Despite an overall trendless market, we’ve seen pockets of strength from a diverse array of contracts. Steel isn’t the only one. In recent months, we’ve covered breakouts in Coffee, Sugar,...

This is the video recording of September 10th 2021 Weekly Jam Session with Sean McLaughlin.

This is the video recording of our September 10, 2021, All Star Charts Crypto Weekly Strategy Session.

From the desk of Willie Delwiche.

Despite government officials trying to explain it away, inflation is running at its highest levels in years or (in the case of producer prices) decades. For now, however, the bond market shows little evidence of concern. After pulling back from 1.75% to 1.15%, the yield on the 10-year T-Note has risen in recent weeks but remains below 1.40%. It has bumped up against that level but has not been able to get through it. German yields have moved higher recently and seem to be giving US yields a green light to break out. Resiliency from Financials even as yields were retreating in Q2 and Q3 also argue for an upside resolution here. The high P/E, speculative growth sectors of the market ran out of steam when yields moved higher earlier this year and they could be vulnerable again if yields make a sustained move to the upside from here.

The big indexes offered us a little pullback this week which has been helping us identify the true standouts -- the stocks that are holding up best in a down tape. We're all about relative strength at All Star Charts as it is one of the most reliable indicators for us. And true leaders really identify themselves when they are swimming against the current while markets are sliding.

So on days and weeks like this, we're paying very close attention to the strongest sectors and keying in on the strongest stocks to see how they react.

Today, one those names is in the Capital Markets space where we're seen tremendous strength this year.

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

Thanks to everyone who participated in last week’s Mystery Chart.

We questioned whether this consolidation would resolve in the direction of the primary downtrend--in which case we would expect a break lower.

Or maybe buyers would step in and defend those former lows once again.

Despite the lack of bearish momentum readings, many of you wanted to sell on a break below support, citing the primary trend as a major deciding factor.

And that's basically where our heads were, too, as it's always easier to go with the trend.

So what are we selling? Or should I say... buying?

The chart was the Small-Cap Technology ETF $PSCT… but it was inverted!

So those who wanted to sell on a breakdown were actually buyers, and vice versa.

Here’s a fresh look at the chart, right side up this time:

...

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

Money really likes to flow where it's treated the best… and as far as sectors and even most industry groups go, there simply isn't much alpha out there at the moment.

In analyzing relative trends, we’re always aware of how the overall stock market is performing against defensive assets. 

In today’s post, we’re going to check in on those sectors investors pile into when seeking safety as opposed to positioning for risk.

Utilities, Real Estate, and Staples... the “bond proxy” groups. Let's dive in.

Here's a custom index of them all charted relative to the broader market.

Notice how the relationship has stopped trending lower since it bottomed back in July.

While many of these defensive groups had been in freefall versus the S&P, as JC discussed in this month's conference call, it’s interesting to see them trying to build out...