From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge

Marijuana stocks have been smoking hot over the trailing quarter, with the Alternative Harvest Marijuana ETF $MJ more than doubling since the election on November 3rd.

Considering this new leadership role over the near-term, today we're going to do a follow-up on our last deep dive into the space, which we published last fall.

Back then, we were simply looking for a bottom and mean reversion move higher, which we got... Now, with the industry making new highs, we want to see how things are looking on both an absolute and relative basis.

And as always, we'll check in on some of our past trades in the space and highlight today's strongest stocks, along with trade setups skewed in our favor that we want to use to express our bullish thesis.

Before we get into the weeds, let’s start at the industry level with the Alternative Harvest ETF (MJ).

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

In a post last month JC discussed the recent strength in Commodities and posed the following question...

If the CRB Index is above its 2016 lows and Crude Oil is above all those former lows from the past decade, how can we be bearish commodities?

Over the last few quarters, we've seen more and more intermarket relationships make a significant shift in favor of risk-assets.

Many are showing early signs of a structural reversal and others simply accelerating in the direction of their underlying trend.

Investors are so scared. They don't want to get burned. They've missed out on one of the greatest stock market rallies in history. They think it's too late for them to be buying stocks.

Here's the thing. I think we've barely even gotten started. This is the beginning, not the end.

Last week the Volatility Index saw its highest reading ever with the S&P500 within 5% of new all-time highs.

When people buy insurance at a faster rate than ever before, does that normally happen just before everyone is thankful they had that insurance? Or does that traditionally occur just after the disaster when it's not necessary anymore?

How funny is it that Saturday Night Live mentioned that the stock market is not working on 3 separate skits in the same episode last weekend?

Hilarious.

This is the video recording of our February 1, 2021 Monthly Charts Live Strategy Session

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

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.

As we discussed in our latest report, bears are running out of any substantial fuel to support their position.

And despite the arrival of some long-awaited selling pressure last week, that absolutely remains the case.

From the desk of Steve Strazza @Sstrazza

In a further 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 the watchlist.

We've already had some great trades from this universe 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.

From the desk of Steve Strazza @Sstrazza

As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.

Different market environments, naturally, are more conducive to certain scans and less so to others.

For example, running our "Short Scan" right now is an absolute waste of time (which in itself is information about the current state of the market). On the other hand, our "Minor Leaguers" is perfect for the current environment due to its focus on Small-Cap stocks.

Our "Squeeze Scan" is also absolute gold for the current market. While Gamestop $GME is stealing all the thunder these days, it's not the only stock being propelled higher by short covering. It's happening more or less across the board in the most shorted names.

In fact, if you were to treat these hated stocks as a basket, they'd be outperforming even the strongest industry groups right now.

From the desk of Steve Strazza @sstrazza

Our most recent Under The Hood report was packed with a handful of buying opportunities. As usual, these names are all exhibiting bullish relative strength and offering investors well-defined risk levels to trade against... and of course, reward profiles skewed heavily in our favor.

In an environment like this one... where areas far and wide are making new highs, and even the weakest corners of the market are participating, there is no shortage of strong stocks floating to the top of our bottoms-up scans.

In recent months, this column (as well as the Minor Leaguers) has been dominated by smaller-cap names as SMIDs and Micro-Caps have been where all the buzz is among investors these days due to their aggressive outperformance.

Makes sense, right?

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.

The Percent of global markets trading above their 50-day average is faltering. It's dropped to 78% (83% for Developed Markets & 74% for Emerging Markets). Below 70% is a warning for the market, below 40% is usually bad news.

Check out the Chart:

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

We continue to experience a bullish expansion in participation from stock markets around the world.

Just a few days ago we discussed buying Israeli stocks and explained how their strength at the index level was being driven by their heavy exposure to Technology.

Mega-Cap Growth and Tech stocks (we're including Communications and Discretionary here -- "Tech but not Tech" names such as Alibaba, Tencent, Meituan, JD.Com, etc.) are also a dominant market force in China.

We wrote about this exact topic in November, and how strength from these names would likely continue to propel these Large-Cap Chinese Indexes and ETFs higher. The Chinese Tech ETF $CQQQ and iShares Large-Cap China ETF $FXI tacked on an additional 24% and 12%, respectively in the time since.

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Monday February 1st @ 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 evening: