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Volatility is sweeping across markets. The dollar is catching a defensive bid. And the major averages continue their downward trajectory as investors desperately look for signs of a bottom.
Yet, despite the bearish action gripping markets, we’re still finding bases we want to buy.
And, to no surprise, many of those smiley faces are in the commodities market.
That’s where we want to focus our attention.
Today, we'll highlight the wheat complex, outlining some tactical setups that complement our bullish structural outlook for commodities and grains.
Let’s dive in!
First up, we have Chicago wheat:
Earlier in the spring, this contract skyrocketed to new all-time highs. It’s since corrected, forming...
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.
We’ve also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let’s dive in and take a look at some of the most important stocks from around the world.
The preliminary May reading for the Consumer Sentiment Index (published by the University of Michigan) dropped to one of its lowest levels on record. The Expectations component is still above its March low, while the view of Current Conditions is at new cycle low - and at its lowest level since late 2008. That’s right - things are seen as worse now than they were at the worst of the COVID-related shutdowns. At one level this seems ludicrous - the S&P 500 is just a few months removed from record highs and pretty much anyone who wants a job can get one. On the other hand, everyone is seeing surging prices at the grocery store and gas station. They see surging balances on their credit card statements, but collapsing balances on their brokerage statements. This an unfamiliar environment for an entire generation of investors who have never experienced a double-digit year-over-year drawdown in the NASDAQ 100. It’s particularly acute for investors who listened to the advice of “experts” and have bought every dip this year. We don’t need to look at this incredulously and suggest things aren’t actually as bad as they have been in...
Ok, so the market is bouncing and its offering a nice reprieve to those who've been caught on the wrong side of the recent slide. Does this mean the bottom is in?
It's far too early to tell. And that's not the bet we're making just yet. In fact, today's trade is to take advantage of a nice bounce in a name we're bearish in to position for a retest of recent lows.
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge
Defense wins championships.
It’s important to remind ourselves of this as risk continues to come off the table.
The largest stocks in the world are losing critical support levels, and even the leaders are coming under pressure. Bonds are catching a defensive bid, credit spreads are as wide as they’ve been in years, and investors are fleeing to the dollar for safety.
Meanwhile, the classic risk barometer – the AUD/JPY – is breaking to fresh lows.
This all speaks of defensive positioning.
Here’s a daily chart of the AUD/JPY:
Just a few weeks ago, the AUD/JPY was rallying to its highest level since the summer of 2015. Now it’s more than 7% off those highs. And as of this writing, it has slid more than 250 pips in today’s session alone.