From the Desk of Kimmy Sokoloff

The futures are indicating lower this morning. A healthy digesting is warranted.

I'd like to see 396, roughly, held over the next few days on $SPY.

If we push past 402.70, then we can potentially see 405, the next level above.

From the desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended January 20, 2023. This report is published bi-weekly and rotated with The Minor Leaguers.

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.

Click here for a behind-the-scenes look at our process.

Whether we’re measuring increasing interest based on large institutional purchases, unusual options...

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

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...

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 positive, with 51% of our list closing higher with a median return of 0.11%.
• Lumber $LB was the winner, closing with a 25.23% gain.
• The biggest loser was the Dow Jones Utilities $DJU, with a weekly loss of -2.83%.
• There was no change in the percentage of assets on our list within 5% of their 52-week highs – currently at 11%.
• 47% of our macro list made fresh 4-week highs, and 30%...

It's the weekly Gold Rush!

The intermarket landscape provides favorable conditions for precious metals as the US dollar experiences an unabated decline.

Check it out...

From the Desk of Kimmy Sokoloff

I mentioned in this morning's note that $SPY had a date with 400.

We hit that level and ran to 402.60, which was top of the Bollinger band.

From the Desk of Ian Culley @IanCulley

Gold is running into supply.

Whether the former 2011 highs still hold any psychological significance doesn’t matter.

Gold bulls continue to find an overwhelming amount of sellers at that level. This will remain the case until demand absorbs supply.

How long will that take? It’s anyone’s guess – maybe weeks, perhaps even months or quarters.

The point is, gold needs time.

Meanwhile, silver futures are coiling within a tight range…

Check out the daily chart of gold’s crazy cousin:

The S&P 500 has rallied off of its October and December lows, but the 200-day average, which rolled over in April 2022, continues to fall.

More Context: Price trends matter. Over the past 2+ decades, all of the net gains for the S&P 500 have come when the index’s 200-day average has been rising. When the trend has been falling, the index has struggled to keep its head above water. While stocks have begun 2023 in rally mode, they are still fighting a downtrend. Stocks can rally within persistent downtrends. But if stocks keep rallying, down-trends cannot persist. The math just doesn’t work. While we are seeing evidence of a tactically more constructive environment, the longer-term trend backdrop remains challenging. The recent strength has a better shot at being sustained if it can flip some of the longer-term trend indicators to a bullish setting.           

In our Market Notes, we take a closer look at longer-term price trends, recent breadth improvements and paradigm shifts that are...

The Bull has been rolling. Have you noticed? Judging by the response I got from an innocent little bullish tweet last week during the midst of a mild pullback for stocks, you'd think I'm insane for thinking stocks have a chance to go up.

So many angry people looking for lower prices.

Maybe they'll be right someday? Chances aren't zero.

Meanwhile, I'll just keep paying attention to price and relative strength which is an excellent guide to point me into winning trades in any direction.

So for today's trade, we're going to ignore the digital assaults on our senses by the angry bears and get analog in our approach to riding this bullish wave.

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

From the Desk of Ian Culley @IanCulley

Gold is running into supply.

Whether the former 2011 highs still hold any psychological significance doesn’t matter.

Gold bulls continue to find an overwhelming amount of sellers at that level. This will remain the case until demand absorbs supply.

How long will that take? It’s anyone’s guess – maybe weeks, perhaps even months or quarters.

The point is, gold needs time.

Meanwhile, silver futures are coiling within a tight range…

Check out the daily chart of gold’s crazy cousin:

At first glance, the current consolidation appears to be a bull flag or pennant.

But, in their classic “Technical Analysis of Stock Trends,” Edwards and Magee issue a clear and present warning: “A pattern of this type that extends beyond three weeks should be watched with suspicion.”

Since the silver chart is working on the fifth week of contracting, the bull flag interpretation is losing credibility.

That doesn’t mean silver futures can’t rip higher here, of course. If they do, I’m buying strength above 24.80 with a tactical target of 27.50.

And if silver is trading above 25,...

There's a high degree of momentum driving the market.

Last week, we saw a continuation of this bullish action, with Bitcoin and altcoins taking out local resistance levels.

This comes as little surprise, considering the trends are now unequivocally higher.