From the desk of Steve Strazza @sstrazza

As most of you know, we're big on our scans here at All Star Charts. And believe it or not, selloffs are actually some of the best times to scan for strength.

While our parameters will vary based on the market backdrop, there are two main things we almost always focus on when scanning for strong stocks in any environment.

First and foremost, we're always looking for leadership. As many of you know, I'm a big advocate of fishing in the right places. Whether it's secret spots on the gulf stream or areas of markets showing strength, it's the same strategy... We want to position ourselves for the best catch.

We also want to limit our risk in case we're wrong. For us, this is as simple as betting only on those setups with clearly defined risk/rewards that are skewed heavily in our favor.

In other words, if we're right, we book hefty profits. On the other hand, if we're wrong, we'll know quickly and be out with minimal damage, and onto the next opportunity.

In...

From the desk of Steve Strazza @Sstrazza

In our continued effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."

We write a post every other week where we outline some of our favorite setups from this universe of stocks.

We've already had some great trades come out of this column and couldn't be happier about the early feedback.

Moving forward, we'll be rotating this column with "Under The Hood" each week.

In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort the stocks by their percentage from new highs. Easy done.

The idea is to catch the strongest names while they're still small and have serious upside potential. If any of these stocks ever climb up the ranks...

From the desk of Steve Strazza @Sstrazza

Small-Caps have been outperforming the large-cap indexes by a mile so far this year.

Since January 1st, the S&P Small-Cap 600 is up roughly 25%, compared with just a 5% gain for the S&P 500, and 0% for the Nasdaq 100.

This leadership is showing no signs of slowing, as they once again led the market back to fresh all-time highs this week after a brief and shallow reset.

Not only has the momentum behind this move been astounding, but the S&P Small-Cap 600 just experienced another significant breadth thrust, this time in its percentage of new 52-week highs.

Let's take a quick look at these developments and what they mean for the group going forward.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

Markets never operate in a static manner. Instead, markets are dynamic and remain in a natural and constant state of flux.

In knowing this, we must always remain flexible and aware of the changing conditions and developments taking place around us. We pride ourselves on our ability to evolve and adapt to these changes in market structure and are never dogmatic in our approach.

For the last decade, US large-cap growth has been where the alpha is, and derivatives of this theme like large over small, stocks over commodities, and US over international have been very powerful relative trends. We know this well because we've been leaning on them for a long time...

But that's all changed recently, as we've been vocal about the importance of repositioning and decreasing exposure to growth in favor of more cyclical, value-oriented stocks.

If history is any guide, Emerging Markets should be a major beneficiary...

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

In this week’s Commodity Report, we saw a continuance of many of the same themes that we've been pounding the table on for months now.

Mainly, strength in the procyclical areas of the market like Energy and Base Metals. This fits with what we’re seeing in Equity Markets as the rotation out of Mega-cap growth and into more cyclical sectors takes hold.

However, Crude Oil and Copper aren’t the only Commodities catching a bid right now. We’re also seeing strength in the grain markets. 

One of the charts that caught our attention this week was Palm Oil Futures.

Palm Oil is one of the most important Commodities in Asia and combined with Soybean Oil it accounts for roughly 63% of the global production of vegetable oils. Its uses vary from cooking and producing processed foods to personal care products like soaps and fragrances. It also plays a key role as feedstock for biofuel production.

While it's important to understand what we're...

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying 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, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table you will notice we...

From the desk of Steve Strazza @sstrazza and Ian Culley @ianculley

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 of 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 it 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?

The Biotech space has seen a lot of price action in both directions over the past several months. As such, there is no surprise that options premiums in that corner of the market have become a bit elevated.

There's a setup I've spotted that offers us a good opportunity to fade these premiums as the sector pauses to digest recent activity.

From the desk of Steve Strazza @Sstrazza

Last week's mystery chart was a popular one, so we inverted it to make things a bit more challenging. Someone still guessed it... Nice work.

It was the iShares 7-10 Year Treasury Bond ETF $IEF. The issue with inverting Bond charts is that when you do they look identical to yields. In the case of IEF, we're basically dealing with the US 10-Year Yield $TNX.

Rising rates has been one of the main themes early this year as developed market yields have accelerated higher and hit the pockets of bond investors all over the world.

In this post, we'll check in on some of the most important and most telling credit instruments on both absolute and relative terms in order to piece together the message the bond market is sending investors.

Read our post from last month for our take on what cross-asset ratios outside of the Bond Market are indicating. Many of these trends have confirmed their reversals and accelerated to the upside over the...

These are the registration details for our live monthly conference call for Premium Members of All Star Charts.

This month’s Conference Call will be held on Monday March 15th at 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Monday night:

From the desk of Willie Delwiche.

Key takeaway: Sentiment shifts last week seemed more reflective of weakness in the headliners than the new weekly closing highs in the equal-weight S&P 500. This is a healthy development, especially for active investors who are seeing the market coalesce around a new leadership group while optimism comes off a boil. For passive investors, the pain of loss is more acute. This risk for the market overall is that diminished optimism morphs into more meaningful pessimism and breadth digestion turns to sustained deterioration. We have not seen that. Even as options data shows more concern and weekly sentiment surveys turn more neutral, fund flows continue to display optimism. When this reverses, risks are likely to rise. From a strategic positioning perspective, risks are elevated and passive investors may just be starting to feel uncomfortable.

Sentiment Chart of the Week: XLE/XLK Ratio

Rotation out of the...

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

Rotation into value is dominating the narrative right now as money continues to pour out of the former leaders and into long-term secular laggards like Financials and Energy.

In line with this trend, we continue to focus less on US Large-Caps and Growth, and instead look for opportunities in SMIDs, Cyclicals, and International stocks.

Overall, the global equity market remains healthy, supported by strong breadth and rotation. Meanwhile, defensive assets like Gold and Bonds continue to underperform.

We've really been hitting on these themes a lot recently. Here's a quick recap of what we're seeing out there:

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