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[PLUS] Weekly Macro Perspectives - Macro Goes From Bad To Worse

September 27, 2022

From the desk of Willie Delwiche.

The earnings momentum trend rolled over last week. Our Macro Health Check now shows red lights (4) outnumbering green lights (2).

Why It Matters: The June stock market lows came with a macro backdrop that was challenging but stable. Stocks don’t move on good and bad, they react to better and worse. The macro environment is getting worse and holding support levels is more of a challenge. 

In taking a Deeper Look we will pull back the curtains on this checklist. We also look at how these latest developments are being reflected in investor risk appetite and where new risks might be developing.

All Star Charts Crypto

Entertaining Another Capitulation Event

September 27, 2022

From the Desk of Louis Sykes @haumicharts

As technical analysts, we pride ourselves on never being dogmatic in our approach.

Always being open to a variety of scenarios will always be a virtue for market analysts and traders who put money to work. We constantly play devil's advocate, questioning whether elements of our macro thesis hold up to criticism.

An integral part of this objective approach is to have a predetermined list of data points that would invalidate our initial models and theses.

In the case of the current market environment, we're of the view that if Bitcoin's holding its prior cycle highs of 18,000 and the S&P 500 is defending its June lows, we don't want to be looking for short opportunities.

Instead, we're better served either focusing on names shaping up as potential long candidates while remaining patient until a more defined directional bias can be ascertained.

But what if we take the other side of this discussion?

What if Bitcoin loses 18,000?

What if there's more pain ahead?

How will we adapt?

With a variety of risk markets pressing to the lower bounds of current trading...

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Follow the Flow (09-26-2022)

September 26, 2022

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

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.

We also weed out hedging activity and ensure there are no offsetting trades that either neutralize or cap the risk on these unusual options trades.

What remains is a list of stocks that large financial institutions are putting big money behind.

And they’re doing so for one reason only: because they think the stock is about to move in their direction and make them a pretty...

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The Minor Leaguers (09-26-2022)

September 26, 2022

From the Desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

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.

This year, 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.

And it doesn't have to be a Russell component — it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to new highs in order to focus on the best players.

But, instead of all-time highs, we're sorting by 52-week highs these days, as we don't want to discriminate against energy or other cyclical stocks.

...

[PLUS] Weekly Market Notes

September 26, 2022
From the desk of Willie Delwiche. Time To Be Level: The Trends Matter

The S&P 500 is testing its mid-June low as it remains in a persistent down-trend. Investors and traders can lean against specific support levels, but it is hard to have high levels of conviction when price and breadth trends continue to decline. 

The Details: At 24 weeks, the current down-trend has lasted longer than any since the Financial Crisis ended in 2009. Prior to the feast or famine years of the past quarter century, persistent downtrends were normal market behavior. 

More Context: Even painful and persistent downtrends eventually end. But for stocks that is much harder to do when bond yields are trending higher (which they are) and/or the dollar is trending higher (which it is). If the stock market trend is going to turn higher, it needs a helping hand from either the bond or currency markets.

Our Deeper Look moves beyond the index and looks at how the market got here and how it is holding up versus where it was in June....