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 uptrend for bonds peaked in early 2021. The trend for stocks did so a year later. Commodities peaked in June and over the past few months the trend has been slowly (an unevenly rolling over).
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.
China Bulls Take Charge
Chinese equities have emerged as some of the unlikely leaders among global markets. In the last month, China Internet ETF (KWEB) and iShares China Large-Cap ETF (FXI) have risen 31% and 19%, respectively. Meanwhile, Emerging Markets (EEM) are only up about 8.5% over the same period.
Equities and cyclicals have seen some modest gains off the lows, while growth areas and crypto markets have waned. In fact, by our calculations, this year has seen one of the greatest disparities in performance between growth and value.
You can see it when you compare something like Bitcoin or Ethereum against the Dow Jones Industrial Average.
Sure, crypto markets have been dragged down by the FTX contagion. Still, perhaps the bigger driver of this price action has been the macro flow out of long-duration growth assets (crypto included) and into traditional value areas.
We're talking industrials, materials, and, of course, energy stocks.
Let me ask you this: In bear markets does it historically get easier and easier to find stocks making new all-time highs?
Where I grew up, new all-time highs, yet alone more and more of them every day, are not something that we normally see in bear markets.
And here we are. I can't remember the last time it was this easy to find stocks breaking out to new highs. And not just new 3-month highs or even 52-week highs.
Stocks are breaking out to new ALL-TIME Highs.
And not just in one or two sectors.
We're seeing it in Financials, Industrials, Technology, Energy, Healthcare, Staples, Telecom and more.
