We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

From the desk of Steve Strazza @sstrazza

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.

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.

They’re doing so for one reason only: because they think the stock is about to...

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.

We recently decided to expand our universe to include some mid-caps…

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.

The way we did this is simple…

To make the cut for our new 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...

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

A Record-Setting Slide

The S&P 500 just booked its seventh consecutive down week. This is only the fourth time in history that the index has registered so many consecutive losing weeks. 

When we look back at the last three instances, the forward returns are mixed. The last time we experienced so many consecutive losing weeks was in the middle of the dot-com bubble crash in 2001. This was not a good time to buy stocks. 

On the other hand, when this happened back in 1970 it coincided with a major bottom. As for the instance in 1980, the forward returns were excellent, but a multi-year bear market followed soon after.

While this stat doesn’t give us an actionable signal over any material timeframe, it does suggest that markets are due for a relief rally.

From the desk of Steve Strazza @Sstrazza

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.

Macro Universe:

• Our macro universe was red again this week, with 55% of our list closing lower with a median return of -0.46%.
• Silver $SI was the winner this week, closing with a 3.20% gain.
• The biggest loser was Lumber $LB, with a massive weekly loss of -27.47%.
• There was a 2% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 9%.
• Only 15% of our macro list made fresh 4-week highs....

Last week, we posed the question, "Was That It?"

As it stands, Bitcoin $BTC continues to hold above 30,000 following its brief false move. There are a number of levels we're monitoring over short time frames.

Correlations with legacy markets remain intact. But we're likely at an inflection point with respect to the co-movement between crypto and legacy.

This will be the emphasis of today's note.

 

 

 

From the desk of Louis Sykes @haumicharts

We've talked at length about the correlations between macro markets and Bitcoin.

A critical element underlying our crypto thesis is heavily driven by how price action is trading alongside equity markets.

In the case of the US dollar, it's the exact same, but the opposite.

Recently, there's been a notable negative correlation between Bitcoin and the dollar.

From the desk of Willie Delwiche.

Key Takeaway:

• Bear market story playing out beneath the surface.
• Contrarian play is in bonds not stocks.
• Challenges ahead, but commodity trends remain robust.

Friday’s mid-day swoon saw the S&P 500 move to new lows for the year and for a time had the index more than 20% below its January peak. By the end of the day, however, those losses were recovered. The index finished up on the day and closed at “only” 18.7% below its all-time high. Friday’s final hour surge was not enough to keep the index from falling for the seventh week in a row. While these swings might pose a dilemma if you insist on seeing a 20% decline to slap a bear market label on the current environment, such is not our concern. I look around and see that it has been six months (and counting) since we last had more new highs than...

If you joined JC and the guys on our live twitter spaces session today, towards the end you heard me venting my current frustration in finding good opportunities to make directional bets in either direction right now. It's tough sticking our neck out here.

But of course, as options traders, we are not limited to just directional bets. We can attempt to pull profits from sideways markets as well. And when volatility is still elevated in most areas, there are plenty of places to look to sell premium. And the best place to do that is in an instrument that we feel is likely to continue trading in a sideways range for a period of time.

Today's idea is one such ETF that has been mired in a nice juicy range for nearly a year now.

 

The next new trade in our Paid-to-Play portfolio is:

ValueAct Partners revealed an additional purchase of roughly $10 million in Insight Enterprises $NSIT, as the activist hedge fund continues to build a position in the enterprise cloud company.

The firm now owns more than 3.8 million shares for a total ownership interest of just under 11%.

The average stock listed on the NYSE is down over 34% off its highs.

The new 52-week highs list peaked in February of last year - that was over 15 months ago!

We've now seen more stocks hitting new lows than new highs for the most consecutive weeks since the Great Financial Crisis.

The Technology, Communications and Consumer Discretionary sectors combined make up almost half of the stocks in the entire S&P500. They're each now down 26%, 33% and 35%, respectively.

In fact, almost half the stocks on the Nasdaq have seen their prices get cut in half.

And people keep asking me if we're going into a bear market?

What the hell do you call that?

If you define all that as a bull market, then I think you need to check yourself into a mental hospital.