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...

From the desk of Willie Delwiche.

The stock market’s reaction to this week’s sharp rise in bond yields has intensified talk of a durable shift in long-term equity leadership, within the US as well as on a global basis. That discussion leads to questions about the best way to visually represent such shifts and what relationships we want to keep our eyes on for evidence that such a shift is indeed taking place. In terms of shifting US leadership, you could do a lot worse than the ratio between the old AMEX Composite (technically now it is the NYSE Mkt Composite) and the S&P 500. The AMEX Composite has less of a mega-cap, tech-sector focus than does the SP& 500. S&P 500 leadership peaked in the late 1990’s and this was followed by a decade of relative strength out of the AMEX. The following decade was again dominated by the S&P 500, but over the past year, the AMEX has perked up and looks ready to wear the leadership mantle again. Getting above its June and November highs versus the S&P 500 would be strong evidence that it is ready for that role. Despite carnage elsewhere to begin 2022, the AMEX Composite closed at a new high as recently as...

From the desk of Steve Strazza @Sstrazza

The most speculative areas of the market peaked in Q1 of 2021 and have been under pressure ever since. It’s not just IPOs and SPACs. Areas like biotech, social media, and online retail have completely fallen out of favor too.

Many of the stocks that have been selling off were among the top performers off the COVID lows in 2020. Some of these former leaders are in 60% to 70% drawdowns today.

What a difference a year can make!

Now that we’re getting closer and closer to the first rate hike, the prevailing opinion seems to be that these stocks will remain under pressure. As things currently stand, there's not much on the charts to suggest they're ready to turn things around.

On the other hand, some of these industry groups are already more than 30% off of their highs -- and that’s at the index level. Eventually, further downside would be inconsistent with the idea that stocks are in a bull market.

For the health of the overall market, we want to see these stocks stop selling off so aggressively. Despite the volatility this week, there are some signs that this is happening.

Let...

Well well well, what do we have here?

The first two days of this week completed a nearly text book Santa Claus rally. Then on Wednesday, it appears the Fed may have stolen his Sleigh and now his reindeer have no idea which way to steer!

This indecision has played out in the options market by raising the risk premiums being asked across a wide sector of index ETFs.

At times like this, I like to go hunting for premium-selling opportunities. And I've got one teed up so lets get to it!

This is the video recording of our January 7, 2022, All Star Charts Crypto Weekly Strategy Session.

We trust the bond market around here.

I don't have a lot of faith in people, or media or economists. But bonds are something we certainly take seriously.

There's no bullshit with them.

The biggest players in the world have no choice but to be intimately involved in fixed income markets. So if you're curious which way the pendulum is swinging, you'll be able to see it in bonds.

Here's a quick look at US Interest Rates making new highs - from the 1yr to 10yr yields these are going towards the upper right:

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.

This is the video recording of the January 6th Weekly Town Hall w/ Willie Delwiche & JC Parets

01/06/22 2:00 PM ET

From the desk of Willie Delwiche.

I recently watched The Matrix with my son. 

Not the fourth installment released late last year, but the original movie – the one that came out more than 20 years ago.

One important caveat: My son is only 13. The Matrix is an R-rated movie filled with violent action scenes. So I didn’t take the decision to let him watch the movie lightly.

Ultimately, I decided the movie raises some important ideas that I wanted to share with him. I'm not talking about ideas of simulated reality or various theatrical elements. For me, one of the key insights is that by tuning out the noise, we can improve our decision making. By focusing on what matters, we have more time to act. When wisdom combines with clarity of purpose, the seconds seem to tick by more slowly.

This doesn't just happen in the movies. Watch an experienced quarterback engineer a winning touchdown drive in the final two minutes of a football game and you will get a sense of what I mean. They seem to have more time to decide, act, and react than anyone else on the field. Maybe time is indeed passing more slowly for them.

What does...

Over the last week, we've been outlining how the market looks set to unwind out of this trading range.

High open interest combined with diminishing implied volatility, increased price stability, and thin futures volume all contribute to a scenario where the probabilities of a long/short squeeze are elevated.

We're still in elevated cash positions and, for the most part, still sitting on the sidelines.