From the desk of Steve Strazza @Sstrazza

Dividend aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for 5-9 years.

We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money”. Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

By adding our technical...

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

Let’s flip the script this week and take a more granular approach to our analysis of market internals.

In recent months, we’ve written at length about deteriorating breath. While it’s been our position that the divergences in these indicators are normal following an onslaught of initiation thrusts like the ones we had last year, the lack of participation beneath the surface was drying up to levels that were simply not sustainable.

This lack of confirmation has caused many to question the new highs from the S&P 500 and other major US averages. But, the major averages have masked the pervasive weakness we’ve already been experiencing beneath the surface this year.

In last week’s post, we discussed this weakness in breadth and posed the following question:

Perhaps we’ve already seen the market correct beneath the surface. Maybe that was it…

The major averages are simply not a good representation of what US stocks have been doing for the past 6 months...

On this week's episode of the podcast, I sit down with David Keller to talk about all things behavioral finance. David is one of my favorite guys to talk to about the subject, so I reached out to him and said, "Dave, come on the pod and let's talk about humans".

He happily agreed and so we hit the ground running talking about Anchoring Bias, Loss Aversion, Risk Management, Supply and Demand Dynamics and Market Sentiment.

This wasn't just an academic endeavor. We also discussed current markets, price trends, momentum, breadth and Dave's favorite trade for the rest of 2021.

I think you're really going to enjoy this one. I certainly did!

My entire career I've been told by the old timers that many of their biggest winners have come from Mid-caps.

That always stuck with me, to the point where when we win in mid-caps, it always hits me, "Those guys were right!"

To be clear, the traditional definition of a Mid-cap stock is between $2-10 Billion in Market Capitalization (Market-cap = shares outstanding x price of the stock). 

I honestly don't know how long that's been the definition, or who's in charge of making that up. But I will tell you that I don't remember a time when that wasn't the definition.

And I've been around a couple of decades already.

So is anyone factoring in Mid-cap inflation these days? 

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 'bottoms-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 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, and Salesforce, to a myriad of others… all would have been on...

From the desk of Willie Delwiche.

Key takeaway: A “no fear” attitude envelopes a market marred by mixed signals and deteriorating breadth. Large-cap indexes push to new highs while small and mid-caps trend lower. We even see an expansion in new lows further down the cap scale. But on the surface, optimism shines. Yet, challenges could lie ahead as a lack of risk-seeking behavior suggests a weariness among investors, and seasonal tendencies lean toward a lackluster performance in the coming months. For now,  equities remain the popular choice among market participants as investor sentiment obscures the fragile reality beneath the surface.

Sentiment Report Chart of the Week: Investors Love Equities

If you want to know what is loved, see where people put their money. Through the first seven months of the year, equity ETFs have seen more than $350 billion of inflows (over the past year, that number swells to half a trillion). Bond ETFs have...

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

We held our August Monthly Strategy Session last night. Premium Members can access and rewatch it here.

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.

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

Was that it for the recent bounce in the US dollar?

A little more than a month ago, we began to see broad-based strength in USD emerge on both a short and intermediate-term basis. 

Since then, it’s been the central theme in currency markets. 

But we're starting to see signs that this near-term US dollar dominance could be fading as bulls have had ample opportunity to push the USD higher in recent months but have made little progress. 

The lack of follow-through can be seen in our long USD trade ideas from late June, as most are not working. We recently saw many crosses reach our risk level, but price rebounded instead of triggering an entry. The EUR/USD is a great example of this. 

One exception is...

Let me make something perfectly clear.

I'm confident that fundamentals are what drives the price of assets.

You also cannot argue against the fact that those prices regularly trend over time.

So Technical Analysis allows us to identify those trends, and profit from them, if that's something that you're into.

For us, we're certainly profit enthusiasts.

That's why we focus on Technical Analysis.

This is the video recording of our August 2, 2021 Monthly Charts Live Strategy Session

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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...

From the desk of Steven Strazza @Sstrazza

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be any security, in any asset class, on any timeframe. Sometimes, it’s an absolute price chart. Other times, it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So let us know what it is… Buy, Sell, or Do Nothing?