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

Last week, we touched on the weakness that’s been developing further out on the yield curve.

The long end simply hasn’t kept pace with shorter-term yields. This is understandable given the magnitude of the move in the 30-year since summer 2020. At some point, the shorter end of the curve needs to play catch up. And it’s done just that these past couple months.

Now it’s time to focus on longer-term rates, as further downside pressure will eventually put the current economic recovery into question.

Let’s put the recent action in rates into perspective as we head into year’s end.

Below is a chart of the US 30-year yield:

After testing a key level of former support turned resistance around 2.23, it’s slipped back toward its summer lows.

If the 30-year yield continues to fall and takes out its former lows around 1.78 that does not bode well for...

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there. We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this...

From the desk of Willie Delwiche.

Key Takeaway: The bulls are back as more and more investors begin to reach for risk. Optimism is expanding across investor surveys and active equity managers have increased their exposure to levels not seen since the beginning of the year. This fresh bout of risk-seeking behavior comes as both momentum and price trends have turned bullish. Also, participation beneath the surface is expanding as the major indexes reach record highs. Combine this backdrop with a healthy number of stubborn bears and we have an environment that supports the next leg higher.

Sentiment Report Chart of the Week: Appetite For Risk Returns

Investors are not just feeling more optimistic, they are doing something about it. NASDAQ trading volume, which fell by nearly 30% from March to October, has turned higher in recent weeks and is 20% higher than it was this time last year. Equity call option activity has also expanded as investors are stepping back up to the ‘risk on’ buffet after a multi-month...

We've made our thoughts clear that if Bitcoin is above 65,000, and the signs of on-chain buying pressure remain intact, upward volatility expansion through price discovery toward 85,000 remains the most probable outcome.

The beneficiaries of such a move would be widespread - down the cap scale of altcoins, and even in the individual stocks that are making crypto an increasing part of their operations.

So let's revisit how we're approaching the stocks in the crypto space, and identify the levels we're watching to manage risk and to take profits along the way.

Today's post has inspired today's musical soundtrack that is oozing out my speakers as I type this.

The Rolling Stones' album Exile on Main St marked a turning point in the trajectory of Rolling Stones lore.

And it feels fitting as today's trade idea has Main Street in its name and it, too, is exhibiting classic characteristics of a major breakout.

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

All Star Momentum is a brand new scan that pinpoints 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 generate great returns.

While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those 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.

Today we're here to discuss with you our process of Top/Down Analysis. As we go on our way, we'd like to take you along on this journey as well.

With the market sectors passing the baton of strength to one another, one sector stood out. PSU banks not only stood out in terms of the outperformance that we're witnessing but also simply because they are PSU Banks. When was the last time one was bullish PSU Banks?

Those who've had their fair share of capital loss in the past have had something to do with PSU banks. For sure.

But has the tide turned? Are we entering a bull market when it comes to this sector? Let's take a look!

From the desk of Steven Strazza @Sstrazza

*** Click here to read the reveal post for this Mystery Chart ***

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So, let us know what it is… Buy, Sell, or Do Nothing?

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

Correlations often work... until they don’t. It’s just the nature of intermarket relationships.

We can see a prime example in the recent action between the US dollar and risk assets.

The dollar has been marching to the beat of its own drum, as it's shown an unusually strong positive correlation with commodities since this summer.

Although the inverse correlation is not as strong with equities, it still exists. But the USD’s resilience during the second half of this year hasn’t stopped stocks from screaming higher. 

While we definitely aren’t in an environment where USD weakness is a tailwind, the evidence continues to stack up in favor of the bulls and risk assets. 

The dollar is just one data point. But it’s a rather important one, as the direction of King Dollar has proven to have a profound impact on other asset classes.

Today, we’re going to highlight the decoupling of USD relationships and what it could mean for the rally in risk assets.

Let’s...

From the desk of Willie Delwiche.

Key Takeaways:

• Despite macro concerns, evidence tilts toward opportunity
• Energy sector strength benefitting active asset allocators  
• Country-level leadership favors dirty energy over clean plays.

A recently published article in the Wall Street Journal reviews "5 reasons why stocks might be weaker in 2022." Mostly it's a list of macro concerns, from liquidity constraints to slowing profit growth to elevated valuations. I am sympathetic to a number of them - to a greater or lesser extent they factor into my consideration of the weight evidence. We need to balance our thinking about various things that could happen against an assessment of what is happening. As any sailor might attest, there can be a big difference between risks on the horizon and conditions that need to be navigated. You don't make much progress if you drop the sail the moment there are storm clouds in the distance. There may be a time to reckon with some (or all) of those clouds at some point, but as we have been discussing in recent...

Things are shaping out really nicely for crypto right now, and the evidence suggests it's only getting started.

Crypto bull markets are seriously no joke, and we wouldn't be surprised to see a lot of these names multi-bag over the coming months and quarters.

But despite how well things are looking, it's vital to remain humble and level-headed throughout it all.

The old saying that "don't confuse brains for a bull market" is particularly relevant here, and is the epitome of the laser eyes crowd. Any idiot can buy a coin that moons in a crypto supercycle, but not everyone can successfully manage risk and their emotions.

"I don't know" is always the right answer.

So despite how well things are shaping out, always try to stay humble and level-headed.

From the desk of Willie Delwiche.

Key Takeaway: Small-caps leading the way higher. No breadth thrusts (yet) but rally participation is improving. Looking for copper & bonds to confirm risk on messages from the equity market.

• Energy and Information Technology are at the top of the relative strength rankings. The industry group heat map confirms this strength with Energy and Semiconductor groups (up and down the cap scale) accounting for five of the top ten spots in the industry group rankings.
• Relative weakness can be found in Utilities, Consumer Staples and Health Care, trends that are echoed in both our sector rankings and the industry group heat map.