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… 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 penny...

From the desk of Steve Strazza @Sstrazza

Welcome to our latest “Minor Leaguers” report.

We’ve already had some great trades come out of this small-cap-focused column since we launched it late last year 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 about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but it’s time we branch out a bit and allow some new stocks to find their way onto our list.

The way we’re doing 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...

This past weekend, I finished reading an illuminating book titled "Empires of Light" (see what I did there?), that dug into the origins of modern electric power as viewed through the lens of the first titans of industry to bring it to the masses: Thomas Edison, George Westinghouse, and Nikola Tesla. It was a fantastic read. And one that hit home due to the fact I grew up less than 20 miles away from Niagara Falls, a location which figures prominently in the birth of the nation's electric grid and modeled how to spread electricity transmission throughout the world.

So, it must be kizmit that the best idea on the table for me to choose from today comes from the energy space -- a $170B company that generates, distributes, and sells electric power to customers in North America.

From the desk of Willie Delwiche.

Key Takeaway: Market breadth souring as new lows spike. Absence of breadth thrusts leaves the market adrift and vulnerable to cross breezes. Healthy appetites for risk likely lead to higher bond yields and commodities prices as well as improving broad market trends.

• With Energy and Financials experiencing short-term weakness, new leaders have emerged. Consumer Discretionary, Technology and Real Estate are in the top three spots in our relative strength rankings, showing leadership on both an equal-weight and cap-weight basis.  
• Our industry group heat map shows Semiconductor strength is fueling the leadership coming from the Tech sector.

Over the last few weeks, we've been in the camp that Bitcoin and most other primary crypto assets will resolve higher into the remainder of the year.

The macro accumulation pointing to a bull run over longer time frames remains intact. But things have certainly been messy in recent weeks, with Bitcoin losing a key level of interest this weekend.

The thesis was that if Bitcoin was below 58,000, the downside risks become elevated for long positions, and elevated cash levels are prudent.

Bitcoin continues to flirt with this level, and the price action in most cryptos looks messy in the near term.

This week we’re looking at a long setup in the Consumption sector space. Seeing as IT and Consumption were the sectors that were displaying most strength, we decided to identify a stock from one of these two sectors.

Let's take a look at what we have!

We retired our "Five Bull Market Barometers" in mid-July last year 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

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.

Mixed Action From Major Averages

The biggest theme from this week was failed breakouts. We saw a lot of major averages and sector indexes in the US violate their former highs and fall back into their prior ranges. The weakness was felt mostly by cyclicals. Large-cap indexes such as the Nasdaq and S&P 500 were largely unaffected and are still at highs. But on balance, the bears scored some points this week by pushing prices back below key levels. The chart below is an excellent depiction of the current state of markets. Some stocks, such as mid-caps, are still above their year-to-date highs and their breakouts are intact. Meanwhile, other stocks and indexes -- like the Small-Cap Russell 2000 (upper pane), just printed failed breakouts and are now trapped beneath significant former resistance.

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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:

• This week, our macro universe was negative as 66% of our list closed lower with a median return of -0.90%.
• Lumber $LB was a massive winner, closing out the week with a nearly 50% gain.
• The biggest loser was Oil $CL, with a weekly loss of -5.81%.
• There was an 8% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 62%.
• 34% of our list made new 4-week lows (versus 15...

It's still not all that pretty out there underneath the surface.

But new all-time highs in the S&P500 is probably not something we should ignore.

History has taught us that when we see that, there are usually more new all-time highs coming shortly after that. And then after that again....

On this episode of Pardon The Price Action, we talk about whether these are all retests or failed breakouts.

That's the big question.

Full video below or Listen to the podcast version.

With Oil testing 76, Financials and Industrials retesting former highs, small-caps and even Bitcoin near critical levels, we want to know if this is just a pause, or the beginning of the end.

All this and so much more on the latest episode Pardon the Price Action!

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts: