Something we've been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying 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 and into mid-cap status (over $2B) then they enter our radar.
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 – from the likes of Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… they all would have been on this list at some point.
When you look at the stocks in our table you will notice we are only focused on technology and growth industry groups such as Software, Semiconductors, Online Retail, Solar, and more.
The curious case of higher implied volatility in out-of-the-money calls than the correspondingly distant OTM puts continues in a lot of high flying names. This is neither good nor bad, rather a data point we can use to our advantage when crafting bullish trade designs.
One such name that's on our radar which also made the cut in ASC's latest Under the Hood report is everyone's favorite blue bird -- Twitter $TWTR.
For our timeframe, we prefer to look bigger picture and not get caught up in the day to day noise.
That's why we have our Monthly Candle Strategy Sessions and Monthly Conference Call where we focus on the broader themes and how to take advantage of them in the market.
One of those themes we've discussed ad-nauseam is the "reflation trade", so today we're getting our magnifying glass out to look at a few daily charts that suggest more trouble/volatility could be ahead for cyclical assets in the near-term.
In an environment where volatility has picked up at the index level and there are more mixed signals in the market, we want to be more selective in the longs and shorts we put on.
An important part of tightening up our risk management across the board is knowing what timeframe is relevant to us, both at the portfolio and individual stock level.
Today we want to look at an example in Jubilant Foodworks to highlight this concept.
Last week’s Mystery Chart featured an ominous rounding top, complete with price violating key lows as it aggressively collapsed.
Today, we’re going to turn that frown upside down. It actually wasn’t a rounding top at all.
We inverted the chart, as we often do, in an effort to make some of you out there aware of any bullish or bearish biases you may have.
In other words, if you were buying this chart (which most of you were NOT), you are really a seller. And if you’re a “seller” who only bought the Mystery Chart because you have a bullish bias, you might now be wondering why you would ever bet against such a nice base.
When we flip this chart around, you can now see we’re looking at a massive base on Japan’s Nikkei 225.
In this post, we’ll check in on the Nikkei and see what market breadth is signaling about the internal strength of the Japanese stock market.
For those new to the exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!
We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.
You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?
We retired our "Five Bull Market Barometers" in mid-July 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 and Louis Sykes @Haumicharts
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the relative strength trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.
Like we discussed last week, Equity Markets are becoming more of a mixed bag. This week, we'll expand on this theme.
Prices continue to flirt with the risk levels we've outlined for various assets in recent weeks. We still believe the weight of the evidence is in favor of the bulls, but with so many assets at inflection points, we're paying close attention to every new day's data as it comes in.
In a recent report to ASC Institutional subscribers, the team laid out a case for strength in the Homebuilding sector as several components are approaching breakout levels from monster bases. Its relative strength vs. the S&P 500 over the past month is evidence that the year-to-date leadership from this group is likely to continue for now.
