This All Star Charts PLUS Monthly Playbook breaks down the investment universe into a series of binary decisions, tactical calls and asset allocation models.
The trend in commodities has rolled over but, for the 96th week in a row, the up-trend in commodities relative to stocks remains intact. You need to go back to the early 70’s to see a longer sustained period of strength in commodities versus stocks.
Focusing our attention on buying stocks over the past 5-6 months has paid very well. This is especially true in the stocks that have been showing the most relative strength this year.
The laggards remain laggards. The losers are mostly still losers.
The breadth improvement, however, remains in place.
Rotation overseas continues to broaden.
It's gotten harder and harder to make money from the short side since this Summer.
There's been no questioning how we've been positioned in crypto markets.
For the longest time, we've promoted high cash positions in this tape. Patience has been a significant virtue for traders to maintain.
Extending on this overarching theme, we yet again argued that caution is advised in the short term in yesterday's note.
While we've been putting forward the utility of patience in this cryptocurrency market for some time, we especially see a confluence of concerning data points.
Most importantly, the S&P 500 is once again testing its channel resistance and AVWAP off the highs, where it has found resistance over the last year.
Further, the dollar index is retesting its breakout level from the 2017 and 2020 highs following the collapse of the FTX and Alameda ecosystem.
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.
