From the desk of Willie Delwiche.

Key Takeaways:

• Emerging Market indexes weighed down by weakness at top.
• Europe & Middle East showing leadership.
• If China is finding a bottom, broad EM strength could support a sustained rally.

Here in the US, a handful of mega-cap stocks are pushing the indexes to new highs, while beneath the surface many stocks are languishing. The NASDAQ Composite began this week by making a new all-time high, but it was the first time in eight days that there were actually more stocks making new highs than were making new lows. The S&P 500 is trading in record territory, while nearly 40% of its stocks aren’t even above their 50-day averages. 

When we look overseas, what’s happening in Emerging Markets is the inverse of what we’re seeing within the US indexes. For EM, the weakness is at the top, in the countries that make up the largest weightings within the EM indexes. China accounts for more than a fifth of the weighting in EM indexes and is down nearly 15% over the past six weeks....

Anything gold-related has not had any fun 2021. I can only imagine the disdain gold bugs must be feeling as they watch governments print money around the world, all things crypto soaring, and all the while their precious shiny little rocks doing jack squat.

If you've been long gold, I'm sorry.

But there's good news...

JC and I were chatting yesterday about what appears to be an opportunity in the Gold space.

Maybe, just maybe, gold has found a short-term bottom? We're not going to go out on a limb and declare THE bottom, but recent price action suggests to us that a bounce might be in store. As such, we want to get involved for a quick little hit-and-run play.

As we laid out in yesterday's call, if Bitcoin is in the 50,000's, we need to be aggressively long crypto.

There's just no way around it.

Above 47,000, the bias is clearly higher toward the first half highs:

The projected move into the 60,000's roughly represents a 30% move. If we know anything about the altcoins, it's that many of them are a double, if not a triple in that environment...

We're already seeing that leadership emerge under the surface, with the altcoins reasserting their former leadership at their pre-covid highs on a relative basis:

So from a pure asset allocation perspective, it makes sense to look for opportunities down the cap scale.

The market never makes things perfectly clean.

But in a perfect world, we'll merely use these smaller names as an avenue to express our bullish...

Commodities are just as messy as any other market at this point, with a lot of constituents now flirting with their overhead resistances.

In such a market scenario, there is one name that's peeping out above its resistance. And that's the name we're going to discuss today.

One great thing about Technical Analysis is that we don't have to pretend to be experts on every subject. Heck, I'm completely clueless on most things.

I know a lot about Baseball, a decent amount about Wine, and I can tell you the direction a chart is currently heading in. Outside of that, I'm mediocre at best on most topics.

So when we laid out the Cardano trade earlier this month, it was purely based on price. The idea was to go long $ADAUSD if it was above 1.40, which represented around $35-$40B in market cap at the time.

Key Takeaway: Indexes find ways to shrug off disappointment. Beneath the surface, market bending, not yet breaking. Surge in bond yields would sap financial liquidity.

• We saw plenty of volatility in the weekly rankings last week (e.g., Health Care rising from #6 to #2, Financials dropping from #1 to #5) but some underlying trends remain intact: Cyclicals (especially outside of Financials) are lagging and the Communication Services sector may not be quite as strong as its current ranking suggests (on an equal-weight basis, it’s ahead of only Energy).
• The Industry Group heat map shows nine of the top ten groups are either large-cap or mid-cap groups (mostly large-cap). Nine of the bottom ten groups are either small-cap or mid-cap (mostly small-cap). More on this later.

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 back to our latest "Under The Hood" column, where we'll cover all the action for the week ended August 20, 2021. This report is published bi-weekly and rotated on-and-off with our "Minor Leaguers" column.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

Watch this video for a "behind the scenes" look at...

In last week's Follow the Flow report, there was a name that caught my attention, but it felt to me the stock had gone too far too fast and I didn't want to chase it.

Well, perhaps my patience is being rewarded as today I'm able to get in with the stock 9 points off last week's highs -- but still sitting right above the level in which we'd like to be involved on the long side.

I love it when that happens!

This is the video recording of our August 23, 2021, All Star Charts Crypto Weekly Strategy Session.

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 context of the big picture 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.

• The broad weakness from risk assets was reflected in our macro universe this week as 77% of our list closed lower with a median return of -0.91%.
• The Volatility Index $VIX was the big winner, closing out the week with more than a 20% gain.
• Meanwhile, the worst performer of the week was Oil $CL, which fell by -8.94%.
  • It was followed closely by another major procyclical commodity - Copper $HG, which dropped -5.80%.
  ...

From the desk of Steve Strazza @Sstrazza

Our Top 10 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.

With more deterioration and choppy action taking place recently, bears are looking at yet another chance to take control. Many critical areas are near the lower end of their respective ranges and once again on breakdown watch.

The rationale is very simple. If bears can’t get it done with all these areas looking increasingly vulnerable right now, it will further enforce the lack of power we’ve seen from sellers in this environment.

If buyers can step in and defend these critical levels in small-caps, regional banks, and copper miners once again, it’s hard to imagine the world is coming to an end. In fact, it would prove incredibly constructive, and would be a new set of data points on the side of the bulls.

...