From the desk of Steve Strazza @Sstrazza

We held our February Monthly Strategy Session Tuesday night. Premium Members can access and re-watch it here.

Non-members can get a quick recap of the call simply by reading this post each month.

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends.

This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

The path of least resistance is higher for yields, as the market continues to punish investors for buying bonds. 

As long as that’s the case, we want to look for short opportunities when approaching the bond market.

Since the shorter end of the curve has ripped higher, the moves in these contracts and ETFs are extended. They simply don't offer favorable risk/reward trade setups at current levels.

We’re better off looking for ways to play rising yields further out on the curve in this environment. 

We’re going to discuss how to do just that by covering a few charts that are setting up on the short side.

First up is the 30-year Treasury bond futures:

T-bonds are carving out a multi-year head-and-shoulders top above their pivot lows from last March.

We want to sell weakness on a decisive break below the neckline and those former lows at 153’07, targeting the 2019 lows around 136’16.

We can only be short on a...

From the desk of Willie Delwiche.

With the weight of the evidence turning neutral and our tactical risk management model arguing for more caution, we have reduced our equity exposure and raised some cash in our Cyclical and Tactical Opportunity Portfolios.

If you've been involved with crypto, you've probably heard the term "whales" thrown around countless times. There's an almost conspiracy-like aura surrounding this cohort of Bitcoin holders.

With an incredible amount of attention placed on this trader cohort, it's important to understand their role in driving price action, macro trends, and more importantly, following their movements.

So, first things first, what even is a "whale"?

[10/19/23: updated stop to 155]

We're taking a Leap here.

The overwhelming majority of options trades we put on at All Star Options tend to be structured in a way to participate in moves that should take place within 2-8 months. The shorter duration trades are usually trades where we are net short premium (naked puts, short strangles, bear call spreads, etc), whereas our longer-term trades tend to be ones where we are net long premium at attractive prices (in volatility terms).

Today, we're doing something we've never done here. We're making a long-term bet utilizing LEAP options.

"LEAP" is an acronym for Long-Term Equity Anticipation Securities. Essentially, this means we're taking a position in options that have greater than a year until expiration.

If you were on the @allstarcharts twitter SPACES chat this morning (every trading day at 11:30ET), you heard us riffing on today's trade.

From the desk of Willie Delwiche.

Key Takeaway:  Investor sentiment looks washed out - at least for now. Investor sentiment was a headwind early in 2021 but more recently had been a neutral market influence from our weight of the evidence perspective. Now, with the indicators pointing toward fear and pessimism and equity inflows sputtering to start 2022, it looks like sentiment now is a tailwind for equities. How long that persists remains to be seen. Seeing pessimism and fear remaining elevated even as if stocks stop going down could help sow the seeds for an unloved rally. Longer-term, there remain imbalances from a valuation and asset allocation perspective that remain unresolved.   

Sentiment Report Chart of the Week: Equity Fund Inflows Sputter

Equity ETFs saw their 20th consecutive month of inflows in January, but last month’s inflows were the smallest since October 2020 and a sharp slowdown...

We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that guides us towards the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to outperform the market.

While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the strongest performers in our universe. These are the ones that are primed for an explosive move.

Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.

Last night went a little longer than I intended but I think it was necessary.

We had a lot to discuss. I hope you found that helpful.

Premium Members can watch the replay of our Live Video Call and download the slides here.

But this is what's on my mind: Is this US Dollar unwind just getting going? 

Is there anything more bullish for risk assets than the US Dollar falling apart?

This is the video recording of our February 1st Monthly Charts Live Strategy Session

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Commodities and cyclical assets have remained resilient, defying headwinds from the US dollar for nearly a year. 

But the US Dollar Index $DXY is sliding lower as evidence mounts in favor of further weakness…

Could those headwinds soon fade away?

Today, we’re going to highlight some critical developments and discuss what they mean for the US dollar, stocks, and commodities in the weeks and months ahead.

Let’s dive in!

First is a chart of the US Dollar Index $DXY:

Its inability to hold above the November 2021 highs screams "failed breakout!"

After undercutting these former highs on Monday, we saw some downside follow-through on Tuesday. Two data points supporting a bearish resolution are commitment of traders (COT) positioning and momentum.

In the middle pane, we’ve highlighted commercial hedgers holding a stretched net short position...

I was chatting with an All Star Options member this morning and he asked me a very insightful question:

“Sean, I’d be very interested in your thoughts on why you choose not to make a trade in certain setups?”

He went on to elaborate that he’d like to know the things I look for that are possible “red flags” that prevent me from pulling the trigger in otherwise good stock setups.

The overwhelming majority of trades I put on for All Star Options subscribers are in stocks that the All Star Charts team has identified as stocks we want to be in (either long or short).

The most common reason I won’t pull the trigger is