From the desk of Steve Strazza @Sstrazza

When running through some scans this morning, we came across a stock that's been on our radar from the Under the Hood universe.

You can read our most recent report here. It was just published Monday.

This is a quick follow-up to discuss a hot stock from a leading industry group... And of course, it's presently offering us a skewed risk/reward. At the end of the day, that's all we're really looking for!

On the surface, this company is just an old LED light and radio-frequency device maker...

But, that's not the whole story.

They actually manufacture and sell some of the most important inputs and materials for a variety of burgeoning growth industries.

While a seemingly favorable fundamental story is always nice to have as a potential catalyst, it is never enough. For us, it's all about price.

Speaking of which, let's dive in and see what the charts are telling us.

Earlier this week we shared a couple of trading ideas in the Commodities space. While Cotton as a commodity continues to shine through, we're seeing some movement in the related stocks as well.

Today we're here to connect the dots and see the impact of the rise in commodity prices on the related stocks.

So let's dive in!

Cotton has been positive in the recent past and has been achieving its targets. What we're seeing right now is an almost 8-year base breakout in the commodity! You can see the clean move and breakout on the monthly chart below. With that said, the long-term trend of this commodity will remain positive so long as it trades above the level of 24,225.

The next target to track would be near 30,000.

Click on the chart to zoom in.

So if the commodity is performing well, there must be certain stocks that must reflect this strength as well, right?

Right! We were going through some names that would require cotton as raw material and would benefit from this move. Some names have been...

From the desk of Willie Delwiche.

Key Takeaways:

• New highs are not expanding, but neither are new lows
• Housing costs fuel inflation but bonds are unconcerned
• Risk on/risk off in neutral but broker dealers threaten break down

As 2021 began, the strong trends that emerged in 2020 were intact. But as we get ready to make the turn to the second half, we find ourselves looking at a muddled mess of stalled out trends and conflicting signals. How these resolve will go a long way toward dictating the paths that the market and the economy take over the second half of the year. 

The NASDAQ and S&P 500 have continued their foray into record territory, but find themselves without much support. Take this week for example. New highs in the indexes on Monday & Tuesday came with a continued contraction in NYSE & NASDAQ new highs and more stocks declining than advancing on the S&P 500. The lack of strength has been...

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

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?

Whether you know it or not, we're all exposed to risk from the financials sector (think big banks, GE, etc).

And when I look across the positions in my portfolio, I have significant open exposure on the long side of the market.

This is top of mind for me right now, coming out of our weekly team call. The recent sloppy market action, with no real expansion of new highs, is opening the door -- if ever so slightly -- for the bull market doubts to creep in. We are certainly not making a "Top" call here by any means, but we are observing that the risks of a potential correction appear to be increasing.

So, while we don't need to get aggressive with short bets here, it might be prudent to start exploring some bearish setups and keep our eyes and minds open for opportunities to get tactically short in names and sectors that would likely lead on the downside if the broader markets were to stumble here. And we can do this without exposing our portfolio to too much risk, thanks to the existence of long exposure already on the books.

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.

There's more noise in the crypto space than arguably any other major asset class on Earth.

The sheer amount of people throwing around chart crimes, shilling bags, and stirring the proverbial pot is unheard of.

Human instincts have really been put on a pedestal throughout this entire cryptocurrency experiment. As Ian McMillan eloquently summarized on the podcast earlier this week, this entire space is the perfect microcosm of human behavior in public markets.

With all this chaos, we need a map that guides us to where to go, and what to avoid.

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

We’ve been pounding the table about the broad-based strength from the US Dollar since earlier this month. Due to the momentum of its recent move, we believe this rally could have legs beyond just the near-term... But we'll address that when the time comes.

For now, we're positioned to take advantage of this swift rebound from the Dollar through a handful of USD crosses currently offering favorable risk/rewards. 

Though the Dollar gave some of this month's gains back last week, our short-term outlook remains higher. As I write this, many G-10 currencies like the Euro, Pound, Aussie, and Canadian Dollar are all rolling over relative to USD. 

We’ll be revisiting this theme plenty as it plays out over the coming weeks to months.

But in the meantime let’s focus on a currency pair that’s bucking the trend, the US Dollar-Brazilian Real $USD/$BRL.

Here’s a weekly bar chart of USD/BRL...

From the desk of Willie Delwiche.

Key takeaway: Even with some indicators backing away from extreme optimism, sentiment remains on the risk side of the scale. Optimism can be slow to unwind as hopeful investors typically hold on until price changes force their hand and compel action. Optimism fades slowly and then all at once (whereas, fear, when it emerges, spikes quickly, and then slowly fades). The decline in consensus bulls and the emerging  pattern of equity market exposure among active managers echoes a waning in risk appetite that can be seen in equity and options market trading volume. Longer-term sentiment indicators continue to point to an elevated risk environment. 

Sentiment Report Chart of the Week: “Less is More”

Our risk-on and risk-off indexes highlight the indecision that the current market environment embodies. Both indexes continue to chop sideways while optimism lingers at elevated levels and bears are nowhere to be...

It's shakeout city in the world of Cryptocurrencies right now.

Failed breakdowns. Bull hooks. Bear traps. Call them what you will, as it's not the nomenclature that matters, but instead the mechanics of these formations which often result in swift moves in the opposite direction...

We've already discussed a handful of these patterns since last week, but this is such a prevalent theme right now that we want to get downright obnoxious about it.

And these failed breakdowns aren't just taking place denominated in US Dollars, but we're also seeing this exact behavior in coins relative to Bitcoin.

So today, let's build on what we discussed yesterday.

I was taught early in my career to never fight Papa Dow.

You know what I used to do all the time early in my career? I would constantly be fighting Papa Dow.

"It's only 30 stocks", I would argue.

"It's a global market", is what I would say.

Guess what?

Never fight Papa Dow.

Thanks Ralph

The Dow Jones Industrial Average is the world's most important stock market index, followed by the Dow Jones Transportation Average.

Here's an old post about how the Dow is underrated.

Anyway, fast forward to today and we have the Dow Industrials hitting our upside objectives in early May:

From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return 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 absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

We've been pretty obnoxious about our position that markets are a total mess these days. But it is what it is, and we can only play the hand we're dealt. 

You can try picking profits out of a trendless environment but at the end of the day, most investors are better off on the sidelines. Imposing one's will upon the market is rarely a winning strategy. We'd rather trade what's in front of us. 

We've covered the best evidence from both the bulls and...