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.
Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
In this weekly note, we highlight 10 of the most important charts or themes we’re currently seeing in asset classes around the world.
Investors Reach for Risk
Last week, the High Beta (SPHB) versus Low Volatility (SPLV) ratio reached its highest level since April of last year. This action speaks to risk-seeking behavior and offensive positioning. As long as these new highs hold, we're looking for equity markets to follow higher in the coming weeks.
A little pullback in stocks today has opened up the window for us to sell some options premium as a nice portfolio hedge for our predominantly long portfolio.
We don't need a long preamble here. The plan is simple: I'm going to enter a delta-neutral credit spread in an ETF that is currently atop my list of ETFs sorted by implied volatility.
2023 is on the cusp of producing as many days with new highs greater than new lows in its first month as 2022 produced over the course of the entire year. Yet there are hurdles to overcome to convincingly argue that this recent strength is sustainable.
Plenty of gold bugs have Krugerrands buried in their backyard or basement – if not secured in a safety deposit box at their local bank.
It’s no wonder gold falls under the “end-of-the-world” category of assets.
Regardless, gold prices can also rise with risk assets.
I raise this point not only as an important reminder but because it’s pivotal to understanding our bullish thesis for precious metals.
It’s a metals story….
When I say Gold 5k, it’s in the same breath as $8 Copper. The structural uptrends for these metals are inseparable in my view, as both stem from a new commodity supercycle.
The overlay chart of Copper and Gold futures tells the story:
