That’s the foundational premise of relative strength studies.
Remember, we always want to buy the strongest and sell the weakest. It sounds simple. But it’s impossible to overstate its importance.
One of the best ways to increase our probability of success is to buy assets that are trending higher on absolute terms while outperforming their alternatives.
Those are key ingredients of a strong uptrend. And it just so happens that gold checks both boxes…
That’s the foundational premise of relative strength studies.
Remember, we always want to buy the strongest and sell the weakest. It sounds simple. But it’s impossible to overstate its importance.
One of the best ways to increase our probability of success is to buy assets that are trending higher on absolute terms while outperforming their alternatives.
Those are key ingredients of a strong uptrend. And it just so happens that gold checks both boxes…
Here’s a chart of gold futures posting fresh two-year highs versus the S&P 500 index:
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 April 3rd @ 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.
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.
We expanded our universe to include some mid-caps.
To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.
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.
The thing about options is that participants in these markets are very good at pricing in expected moves. You'd be amazed at how often the options market nails the expected move in an instrument before it happens.
Like point spreads in sports betting, it's amazing how often they nail it.
But when options are mispriced, meaning traders are not expecting something -- that's where big wins can happen for those who position accordingly.
We think one such opportunity is presenting itself in the consumer staples corner of the world. And if we get right, we might have a 20-bagger on our hands.
