This is the video recording of the October 28th Weekly Town Hall w/ Willie Delwiche & JC Parets

10/28/21 3PM ET

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

Long-term interest rates have taken a hit this week, while the short end of the curve has continued higher. When we zoom out a bit, yields have been rising across the curve since this summer.

During the past few months, the 2-year yield has ticked higher by more than 30 basis points (bps), the 5-year has increased by almost 60 bps, and the 10-year has gained 40 bps. But when we look all the way out to the 30-year, it's only risen by roughly 20 basis points.

Rates are rallying across the board, Treasuries are trending lower, and bond market investors are favoring TIPS and higher-yielding securities.

How do we want to position ourselves in this kind of environment?

Well, we definitely don’t want to be buying Treasury bonds.

In today’s post, we’re going to take a trip around the fixed-income market and discuss some US Treasury funds we can use as vehicles to express our thesis.

Let’s...

In yesterday's note, we outlined our tactical short if Bitcoin was below 59k.

We gave the bears the benefit of the doubt, but they couldn't keep prices under 60k for long at all.

We have no shame in being wrong and flipping our approach as new data comes in. In fact, we pride ourselves on always adapting to new evidence and never being dogmatic. The quicker we know we're wrong the better, because we can move on to bigger and better opportunities. In this case, we knew in just a few short hours!

This seems like a textbook failed head-and-shoulders pattern right now:

We like it best when patterns don't work, because it can create a major whipsaw that can send prices immediately higher. For a deeper dive into why this is the case, read this old post of ours.

So, with our shorts positions quickly closed, it's now irresponsible to be short if Bitcoin'...

From the desk of Willie Delwiche.

"We make our decisions, and then our decisions make us."

I came across that quote in a book I was reading this week (no apologies here -- I read books -- that's what I do).

That prompted me to think about how it was this time last year that I had some decisions to make about what was next in my professional journey. JC and I talked about my joining the All Star Charts team. I (we) made the decision to do just that -- and while the impacts of that decision continue to unfold, I've not regretted it for a moment. And knowing what I know now, that decision seems more obvious than it did when I made it a year ago.

It's not just the active decisions that form us. Where we pay attention matters as well. The 18th century poet William Blake was ahead of his time when he observed how "we become what we behold."

A couple of days back we were mentioning the areas of the market that looked weaker than the others.

Today, we are here to discuss the areas of the market where despite today's correction, we saw some strength.

Using relative strength charts for analysis is a great tool to have. But there is another way to look at it. When the market is correcting and certain stocks are going up, that is information. That is relative strength. And vice versa of course.

So let's take a look at the sectors that were displaying strength.

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 Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

We use a wide variety of bottom-up tools and scans to complement our top-down approach. This makes it near impossible for us to miss out on favorable trading opportunities.

One way we do 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 a myriad of others – would have been on this list at...

Over the last week, we've raised attention on the increasing leverage being introduced in the derivative markets elevating the downside risks of the overall crypto market.

We were seeing this with record-high open interest across the board and excessive funding in the face of declining prices.

This morning, we've seen this downside risk play out in some respects, with $200M worth in Bitcoin positions getting liquidated over the last 24 hours, quickly sending prices below 60,000.

From the desk of Willie Delwiche.

Key Takeaway: There are plenty of adages to remind us that evidence of optimism re-emerging as stocks rally is neither surprising nor necessarily harmful to the health of the rally. When optimism gets overly excessive and begins to retreat we need to pay more attention to the risk side of the equation. What really caught our attention this week was that the imbalance in sentiment expressed by advisory services (Investors Intelligence) and individual investors (AAII) has been resolved. In mid-September, the AAII survey showed 22% bulls and 39% bears while the II survey had 50% bulls and 22% bears. Both surveys now show bulls in the 40’s and bears in the 20’s. Our sentiment chart of the week shows that when we’ve seen this degree of agreement between these surveys in the past, stocks have tended to do pretty well.

Sentiment Report Chart of the Week:  Stocks Appreciate Survey Agreement

It happened in March of this year, it’s happening again - the II and AAII surveys are in...

Feels good to be back from vacation! And I'm glad to see the stock market fared nicely while I was gone.

Looking around, we're seeing lots of fresh setups. But with earnings calls on deck, I'll have to be patient with many of my favorite ideas to let the event pass so as not to caught offsides by a sudden move in the wrong direction.

However, one of my favorite setups just got its latest earnings release out of the way this morning and thankfully it basically amounted to a non-event. Its recent breakaway gap continues to hold above its prior 3-year resistance level. And with the binary earnings event out of the way, options premiums have been evaporating throughout the day. This sets us up for taking a longer-term position at advantageous prices.

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.

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

Crude oil has stolen the show, as it’s up more than 28% from its August lows.

What started as a questionable breakout has turned into a full-fledged rally -- and the broader market seems to agree.

Copper retested its all-time highs last week, interest rates are on the rise across the curve, and cyclical stocks have become leaders.

All of these events fit neatly in an environment where crude oil prices continue higher.

But what does the currency market have to say about the recent strength from black gold?

Let’s look at our Petrocurrency Index for clues, along with one forex pair that's showing strength against the US dollar.

First, we have our Petrocurrency Index overlaid with crude oil futures:

...