Sometimes investors forget that there are 500+ stocks in the S&P500, 30 stocks in the DJ Industrial Avg and approximately 3000 stocks in the Russell3000.
This is all free and public information.
But still, investors forget, especially during times when it's most important to remember.
That's just human nature.
We take things for granted until we need them the most.
This quarter has been a prime example.
You see, while the S&P500 and other indexes were making new lows last month, the list of stocks making new lows had already peaked in early October.
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've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
We expanded our universe to include some mid-caps.
To make the cut for our Minor Leaguers list now, a company must have a market cap between $1 and $4B.
The powerful rally in stocks shows where the "pain trade" is (higher), and now I'm on the hunt for strong, leading stocks that will continue to turn the screws on the bears.
Crude oil is relinquishing its leadership role. Gold and silver are catching a bid. And copper is digging in at former support.
But it’s not only base and precious metals bouncing off critical levels…
Check out our Equal-weight Commodity Index refusing to roll over:
Our commodity index, comprised of an equally weighted basket of 33 commodities, is finding support at a shelf of former highs. This is the principle of polarity at its finest – former resistance turning into support.
