From the Desk of Kimmy Sokoloff

This morning, $SPY is around the 386 level, which is right at the 21-day moving average.

We have Federal Reserve Chair Jerome Powell speaking early this morning, so the market might be whippy.

From the Desk of Steve Strazza @Sstrazza.

Welcome to Under the Hood, where we'll cover all the action for the week ended January 6, 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 activity, or simply...

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 81% of our list closing higher with a median return of 1.46%.
• The Emerging Markets $EEM was the winner, closing with a 5.73% gain.
• The biggest loser was Oil $CL, with a weekly loss of -8.09%.
• There was a 2% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 4%.
• 45% of our macro list made fresh 4-week highs, and 15% made new...

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts 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.

They’re Buying European Banks

European Financials (EUFN) have been among the best-performing industry groups for the last three months. As you can see, price recently reclaimed a critical level of interest and is pushing against seven-month highs. This is evidence of a bullish uptick in risk appetite.

New highs exceeded new lows last week for the first time since August (and only the third time since November 2021). That is a positive development but there is more work to be done before concluding that a new bull market has been reborn.

More Context: With this week’s improvement, our bull market re-birth checklist now has two out of the five criteria satisfied. It’s heading in the right direction, but 2022 was full of bounces that were not sustained and strength that did not persist. Big moves in both directions was a key part of last year’s experience, which saw the S&P 500 recording the 3rd most 3% up weeks and the 3rd most 3% down weeks in the past 70+ years. Further, we are seeing relative trends point to new leadership (equal-weight over cap-weight in the US; the rest of the world over the US on a global basis), but in most cases, the new leaders remain in longer-term down-trends. If we want to get more constructive on equities as an asset class, that needs to change.       

In our ...

From the Desk of Kimmy Sokoloff

Overall, that was a nice move in the market today.

As the day went on, though, the indices did pull in.

From the Desk of Ian Culley @IanCulley

Have you noticed precious metals printing fresh highs?

Last week, gold posted new multi-month highs. So did silver and platinum, hitting their highest levels since the spring of 2022.

Not a bad start to 2023 for these shiny rocks. And it gets better!

Gold broke out to new all-time highs relative to bonds last week. The yellow metal is not only showing strength on an absolute basis – it’s also outperforming its alternatives.

These are classic bull market characteristics and two critical pieces of evidence suggesting gold is in the early stages of a new structural uptrend.

If gold is on its way to new all-time highs, gold mining stocks will be participating. 

And it just so happens they are…

If gold prices rise, companies that remove gold from the ground and sell it will surely benefit. Simple!

Check out the Philadelphia Gold and Silver Index $XAU, which tracks the 30 largest precious metal mining stocks:

We don’t directly trade XAU. Instead, we look to the index for information. Think of it as a roadmap for gold mining ETFs and stocks.

Last November, XAU...

No doubt Gold Bugs have been enjoying the price action in gold instruments recently. It has been a profitable few months to be long just about anything shiny -- even silver!

The All Star Charts research team published a continued bullish piece on the sector today.

Today's options trade is a conservative bet on a continuation of this pattern. Let's get right to it.

From the Desk of Ian Culley @IanCulley

Have you noticed precious metals printing fresh highs?

Last week, gold posted new multi-month highs. So did silver and platinum, hitting their highest levels since the spring of 2022.

Not a bad start to 2023 for these shiny rocks. And it gets better!

Gold broke out to new all-time highs relative to bonds last week. The yellow metal is not only showing strength on an absolute basis – it’s also outperforming its alternatives.

These are classic bull market characteristics and two critical pieces of evidence suggesting gold is in the early stages of a new structural uptrend.

If gold is on its way to new all-time highs, gold mining stocks will be participating. 

And it just so happens they are…

If gold prices rise, companies that remove gold from the ground and sell it will surely benefit. Simple!

...

We've adjusted a position in the Paid-to-Play portfolio today: