Energy is dominating the market sector conversation these days. And well, you can see a reflection of that in the stocks and the strength coming through.

Today we're here to discuss a long setup in the Energy space.

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.

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.

The way we did this is simple…

To make the cut for our revised Minor Leaguers list, a company must have a market cap between $1B 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.

After our price and liquidity filters are applied, we sort by proximity to new highs in order 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 their...

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.

A Tale Of Two Markets

2022 has been a tale of two markets. On the one hand, cyclical stocks have shown impressive leadership as they continue to trend higher and make new highs. But then there are growth stocks which continue to lag significantly as they struggle to find a bottom. While this trend is really nothing new, it has accelerated notably in recent months. The bubble chart below is a great way to visualize the dispersion in performance between these two groups of stocks. Whether the leaders catch lower, or the laggards eventually play catch-up is something we’ll have to wait and see. But for now, the two are moving in opposite directions. As long as this is the case, we want to continue positioning ourselves in the strongest groups while staying away from the weakest ones.

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 72% of our list closed lower with a median return of -1.25%.
• US 10-Year Yield $TNX was the winner this week with a gain of about 30bps.
• The biggest loser was Dow Jones Transports $DJT, with a weekly loss of -6.71%.
• There was a 5% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 28%.
• 15% of our macro list made fresh 4-week highs, 13...

From the desk of Willie Delwiche.

Key Takeaway:

• Global bond yields racing higher.
• Median CPI from Cleveland Fed is the key inflation report.
• April not living up to its ‘best month’ billing.

The race is on for global bonds yields. The 10-year yield in the US is heading toward 3% (a level last touched in 2018), in the UK it’s heading toward 2% (a level last seen in 2015) and in Germany it’s heading toward 1% (a level last reached in 2014). While these global benchmarks are each now contending with their own important thresholds, a decade ago, they were all separated by only a few basis points. Prices for bonds move in the opposite direction of yields, and bond traders are learning how dangerous it can be to try to catch a falling knife....

From the desk of Steve Strazza @Sstrazza

We held our April Monthly Strategy Session last week. Premium Members can click here to review the recording and download the chartbook.

Non-members can get a quick recap of the call simply by reading this post each month.

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.

This is easily one of our most valuable exercises, as it forces us to put aside the day-to-day noise and simply examine markets from a “big picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

When one of the biggest stocks in the world in one of the most well-known names in the world breaks out of a two-year base to new all-time highs, we have to pay attention. There may be a lot of ways to interpret this price action, but one thing we cannot call this action is bearish.

And today's early trading action and elevated options premiums are offering us a good opportunity to get advantageously positioned for a big move.

Over the last few weeks, we've promoted our bullish crypto thesis, even going so far as to argue the Bitcoin bear market had concluded.

As of the writing of this note, we're currently watching Bitcoin lose our risk management level of 42,500. We entered into some small hedging positions on the loss of 46,000, but now we're looking to add to our hedging positions/raising cash this morning.

 

It didn’t even last a week!

The Elon and Twitter $TWTR team-up is over before it ever got started.

In a tweet last night, Twitter CEO Parag Agrawal announced that Elon had rejected the company’s offer to join the board.

The two will not be working together for now, at least not in a friendly way.

I was just in Boston for a couple of days for a family function.

It had been about a decade since I was last there.

I gotta tell you, I really like Boston a lot. I used to go quite often right after college because I had a lot of buddies who moved there.

Nothing but fond memories.

Anyway, I stayed in Beacon Hill this weekend, which as it turns out is a beautiful part of the city. A ton of bars, restaurants and shops. Right next to the park. Right by the water.

I highly encourage you to take the family and check it out.

So in the afternoon I met a lot of people who I had never met before. Everyone was super nice.

We got into talking about how things were early in my career. I had gone to Catholic school from the age of 4 until I was 22, when I graduated from Fairfield University.

Then came Wall Street....

What Happens on Expiration Day when I'm holding long options?

I’ve gotten some questions recently about what happens to an open options position if we’re still in it when the contracts expire. 

Caveat: I will rarely hold an options contract in ASO trades into expiration unless it’s a winning position and it's going my way. Profit targets or stop loss exits will usually get me out far in advance of expiration day.

Let’s dig in… 

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:

 

 

I promise this isn’t a “Go-Have-a-Baby” post that talks about how the greatest thing a human can do is procreate.

I’ve recently come to somewhat believe that. But I won’t be that guy here.

My friend Michael Nauss (@michaelnaussCMT on Twitter) just welcomed his first child into the world – a beautiful baby boy – and I couldn’t be happier for him.

And it got me thinking about all the ways my perspectives on things have changed since becoming a father myself nearly 8 years ago.

The biggest change for me is that I’m only now beginning to fully appreciate the hard work and sacrifice my mother had to go through to raise me and my two younger siblings.

My father left our house and the divorce process began when I was about 7 years old. At that time, my mom was a stay-at-home mom with no source of income. And my dad, while well-intentioned, was pretty much a deadbeat when it came to finances. So she was basically left to fend for herself with no money and no family around to help out.

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.

 

We're back with another commodity post in the Commodity Check series. Today we're highlighting a commodity that had quite a meteoric rise since November 2021. In February this year, we saw the price consolidate sideways. But guess what? We have a breakout!

Let me give you another hint. It's another Agri commodity.

Did you guess it yet?

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 10, 2021, high, which is when new 52-week highs peaked...

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

Following some explosive moves earlier in the year, the past few weeks have been full of sideways action for commodities.

Energy contracts are correcting. Copper continues to consolidate. And gold is chopping around in the middle of its multi-year range.

But when it comes to commodities, there’s always an opportunity right around the corner. 

Last week, we pointed out the burgeoning strength in natural gas futures despite the corrective action in crude oil and its derivatives.

Today, we’re going to outline a few developing setups with a focus on ags.

Let’s dive in!

First up are corn futures:

Since last November, we’ve had our eyes on the grain markets, and corn has been one of our most successful trades. It completed a larger basing...

From the desk of Willie Delwiche.

The Fed was all over the news this week, going out of its way to telegraph to the market its intention to pursue an accelerated pace of rate hikes. Fed funds futures seem to be getting the message. A month ago, futures were priced for year-end fed funds rate of 1.50 - 1.75%. That is now up to between 2.50% - 3.00%. In past accelerated tightening cycles, both stocks and commodities were strong into the initial rate hike. Their paths, however, soon diverged. Commodities remained strong and on average didn’t peak until a year and a half after rate hikes began. Stocks have tended to struggle during these tightening cycles, working sideways to lower for an extended period of time. Every cycle has its own unique characteristics, but if history is any guide it makes sense to favor commodities over stocks when the Fed is rapidly tightening monetary policy.