The next new trade in our Paid-to-Play portfolio is:

Earlier this morning, the long-awaited Ethereum merge was finalized.

Ethereum has successfully transitioned into the proof-of-stake (PoS) model, leaving Bitcoin as the only proof-of-work (PoW) blockchain of scale.

This is a major turning point, particularly in an ideological sense. The debate between the PoS and PoW frameworks will only intensify following this transition.

H Partners Management filed a Form 4 reporting the purchase of roughly $4.6 million in the theme parks corporation Six Flags Entertainment $SIX.

The hedge fund now has a total stake in SIX of more than 11.50%.

We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that guides us towards the very best stocks in the market. We have incorporated our stock universe of Nifty 500 as the base this time around. Among the 500 stocks that we follow, this scan will pump out names that are most likely to outperform the market.

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 list at some point during their journey...

From the desk of Willie Delwiche.

Key Takeaway: The bulls have some heavy lifting as bears pack on the pounds. Yes, last week was impressive, as was the summer rally. But questions about sustainability remain. After all, in the wake of the greatest bull market rally in history in 2020/2021, it shouldn’t be surprising to get the most significant bear market rally ever in 2022. That leaves stocks with an uphill battle in the face of persistent macro headwinds (rising interest rates, dwindling growth expectations, and unrelenting US dollar strength). While pessimism has reached levels indicating opportunity and decreased risk for longs, downside risks remain. An increase in selling pressure could excite the bear camp, prompting a more complete unwind in equity exposure and accelerating interest in bonds even if yields continue to move higher.

Sentiment Report Chart of the Week: Bonds Unloved For Long Enough?

Quarterly data from the Federal Reserve shows investors are getting more interested in bonds, albeit...

Risk markets tanked yesterday after the release of CPI data for August, as inflation numbers ran hot against expectations.

Crypto markets especially felt the heat, with Bitcoin dropping 10% on the day and Ethereum posting an 8.5% drop.

With the CPI print behind us, yet another volatile event is on the horizon. That's the Ethereum merge, which is on track to happen in the next 24 hours.

In the past, we've mentioned that the merge is merely a narrative, as Ethereum is just tracking with the equity markets.

While this still holds true, it would be natural to expect a brief decoupling between Ethereum and equities, given the skewed positioning within the futures markets.

Yesterday, we talked about the likelihood that Ethereum funding would dip in parabolic fashion leading to the merge.

And, since then, funding has taken a dramatic hit.

We've adjusted a position in the Paid-to-Play portfolio today:

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

The largest insider transaction on today's list is a Form 4 filing by Sameer Gandhi, a director at Freshworks $FRSH.

Gandhi reported a purchase of FRSH stock worth $11.5 million.

From the Desk of Ian Culley @IanCulley

Sometimes you have to go back to the basics. 

One simple concept has served me well over the years: Don’t fight the primary trend.

There are many other best practices I use to maintain my sanity regardless of underlying market conditions. But sticking with the underlying trend is fundamental to any trader’s success. 

As Charles Dow established more than a hundred years ago, trends persist! This concept is one of the key Dow Theory tenets and forms the foundation of any trend-following strategy.

It’s our job as technicians, traders, and investors to identify the primary trend and ride it as long as possible. 

And it’s difficult to imagine a stronger trend in 2022 than the rising dollar.

From the desk of Willie Delwiche.

Key Takeaways:

• Labor market imbalances are fueling a persistent rise in inflation
• Median CPI hitting new highs means inflation has not peaked 
• Equities will need to reckon with more Fed tightening and higher bond yields

Surging inflation over the past year has always been about more than just planes, trains, and automobiles - how much they cost to purchase and how much they cost to operate. Too much of the focus has been on the inflation outliers like the spike & cooling in used car prices or the surge and collapse in gasoline prices. Those are post-COVID talking points, but not really drivers of the underlying trend in inflation. So while headline CPI and (to a lesser extent) core CPI get the headlines, median CPI continues to trend higher, as it was doing pre-COVID and as it has been doing in recent months.

Imbalances in the labor market are driving this trend - which suggests that getting inflation under control will be inconsistent with a soft-landing for the economy. This isn’t just...

We've adjusted a position in the Paid-to-Play portfolio today:

We're a day away from the anticipated Ethereum merge, by which the network will transition from a Proof-of-Work to a Proof-of-Stake model.

Investors are clearly hedging their positions moving into this event, with Ethereum perpetual swaps trading with rather bearish funding rates.

And Ethereum quarterlies have been trading firmly in backwardation, pointing to a strong flight to hedging positions.

The most significant insider activity on today's list comes in a Form 4 filing by Kelcy Warren, the executive chairman of Energy Transfer $ET.

Warren reported a purchase worth roughly $29.2 million.

PSU Banks are generally slow to catch up on a bullish trend. But speed is not what we're after. We're trying to lock into accuracy. So we wait patiently until the alarm bells go off and then we look into PSUs.

Well, its that time again! We have some stocks here that are displaying strength and some that are just breaking out. Let's take a look at this list, shall we?

Let's start off with an index view, just to see where we're at in the trend.

Guess what we have at an index level when it comes to the PSU Banks? 2-year highs, folks! PSUs had been struggling to sustain above the crucial level of 2,700. As you can see, the price movement in the recent past has been full of whipsaws. We finally have new highs coming off of those whipsaws as well.

With the price gaining momentum, we're looking out for targets close to 3,445 and 3,730.

Click on the chart to zoom in.

Ok, so the trend is positive on an absolute basis. But do we have any update on relative strength?

We may.

Key Takeaway:

• Getting back to “Yes” on our Bull Market Re-Birth Checklist still requires some heavy lifting.
• Beneath the surface, stocks are getting back in gear.
• The Fed isn’t a friend and overcoming higher bond yields could be a challenge for stocks.

Stocks turned higher last week, and while Friday saw more new highs than news on the NYSE for the first time in two weeks, it was not enough to prevent a third consecutive week of new lows outpacing new highs (on both the NYSE and NASDAQ). Friday’s strength was sufficient to produce an encouraging up-side volume thrust and our short and intermediate-term risk indicators moved back into positive territory last week. If stocks can build on that progress, we could soon be hitting “Yes” on a number of our Bull Market Re-Birth Checklist criteria. But there is still plenty of work to be done.

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.

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.

We expanded our universe to include some mid-caps.

To make the cut for our 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...

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...