From the Desk of Ian Culley @IanCulley

Market participants are searching for a new narrative. 

Their uncertainty-fueled meandering is breeding US dollar strength. 

Will the Fed cut, or will they simply do nothing at the March meeting?

No one knows. 

But risk-on currencies have halted their recent advance. And luckily, we have price to light our way…

Check out the New Zealand dollar-US dollar pair (NZD/USD):

The New Zealand dollar is considered a “risk-on” currency as it tends to follow risk assets (global equities and commodities). Notice the NZD/USD rallied into the holidays off its October lows, much like US stocks. That’s not a coincidence.

From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

Breadth is expanding to a growing list of sectors and industry groups as the current bull market continues to broaden in scope and participation.

Naturally, this phenomenon is not limited to the US. We’re also seeing more and more countries and regions around the world join in on the party.

As the dominance from mega-cap growth fades, and cyclical and value stocks assume leadership roles, the stage is finally set for international outperformance.

In fact, despite how good US stocks were in 2023, they were not the best.

Today, we’re going to talk about Latin America. They were last year’s global leader, and we think the region is poised for more outperformance in the future.

First, with all the buzz about US stocks this past year, you’d think they were the leader. They weren’t.

Here is a 2023 performance chart of international indexes by region:

From the desk of Steve Strazza @Sstrazza

We held our January Monthly Strategy Session last week. 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.

In today's Daily Digest, we'll review:

1. No new positions today.
2. Defensive adjustment in XBI.
3. Profitable exit in GLD.
4. Current status of open campaigns.

Let's dig in!

From the Desk of Steve Strazza and Alfonso Depablos

The largest insider buy on today’s list comes in a Form 4 filing by Timothy C. Wentworth, CEO of Walgreens Boots Alliance $WBA.

Wentworth reported a purchase of 10,000 WBA shares, equivalent to $242,220.

The NYSE new 52-week high list peaked on December 14th. That puts us almost a month into some kind of correction underneath the surface.

And this sort of behavior is fine in bull markets. Go back and look over the past 100 years. It's actually perfectly normal.

Last week we discussed what a bigger correction might look like, and what the market would have to do to hold on to its ongoing uptrend.

Let's remember, the Dow Jones Industrial Avg rallied 5000 points in 2 months. Give it a break.

See: New Year & New Trends

Among the most important groups of stocks comes Financials, of course.

Here is arguably the most important component in the U.S. Financials Index going out at new all-time highs:

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

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.

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended January 5, 2024. This report is published bi-weekly, in rotation with The Minor Leaguers.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names.

There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

From the Desk of Ian Culley @IanCulley

A risk-off tone is blanketing the precious metal space as a key data point suggests more pain ahead…

Silver is underperforming gold.

Sorry if today's blog title is a dated, obscure movie reference. I can't help myself sometimes.

But today's setup is no joke. We've got a stock that's a little off the mainstream path, which makes me like it even more. Stocks like this, which few have heard of, can sometimes quietly move higher. And then this slowly draws more attention (and buyers) to it, which helps our position.

So let's get to it.

In today's Daily Digest, we'll review:

1. New Position in SMH.
2. No adjustments today.
3. No exits since the last report.
4. Current status of open campaigns.

Let's dig in!

From the Desk of Ian Culley @IanCulley

A risk-off tone is blanketing the precious metal space as a key data point suggests more pain ahead…

Silver is underperforming gold.

Check out silver undercutting a shelf of former lows relative to gold:

The breakdown signals a lack of interest or risk-seeking behavior in the higher-beta vehicle.

When silver fails to catch a relative bid, the entire precious metals space tends to follow.