From the Desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as "a market of stocks."

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.

Now, we're also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

From the Desk of Ian Culley @IanCulley

The most important chart in the world is back in action!

A rising US dollar is generating increased selling pressure for risk assets and global currencies.

US Treasury bonds, stock indexes, and even commodities are catching lower.

Yet it’s nothing new for the top components of the US Dollar Index $DXY (the euro leads at 57.6%, followed by the yen at 13.6% and the pound at 11.9%).

New lows and broken support have become standard for these currencies. 

But King Dollar’s command is spreading to the more resilient pockets of the forex market, as fresh breakouts mount.

Here’s the US dollar-Canadian dollar pair breaking above a key retracement level to six-month highs following a litany of missed attempts:

From the Desk of Alfonso Depablos @Alfcharts

Rising rates have been a worldwide phenomenon for the last two and a half years as yields have climbed non-stop.

Not only are we seeing the curve in the US reach decade-long highs, but the benchmark yields in Germany, France, Spain, and even Japan are also trading at multi-year highs.

Below is the US 10-year Yield reaching its highest level since 2007 after breaking out of a multi-month base three weeks ago.

From the Desk of Kimmy Sokoloff

The indices had somewhat of a tiny relief bounce.

But it wasn't really much to speak of...

There's a time to be aggressive and go for big gains, and there's a time to shoot for higher probabilities with smaller payout potentials.

I'm finding it hard to muster any conviction to go either long or short right now, as I can make compelling cases for both the bull and the bear thesis here.

In today's tape, my feeling is we need to err on the side of being too conservative and trade with a margin of safety.

So today, we're putting on what I feel to be a conservative, delta-neutral options trade in the technology sector ETF $XLK.

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

From the Desk of Steve Strazza and Alfonso Depablos

The largest insider buy on today’s list comes in a Form 4 filing by Robert E. Cauley, CEO of Orchid Island Capital $ORC.

Cauley reported an ORC purchase in the amount of $235,700.

From the Desk of Kimmy Sokoloff

I think the S&P 500 has potential to drop below its 200-day moving average and snap back.

I think we can have another push lower, and then we get relief.

This is the video recording of our October 3rd Monthly Charts Live Strategy Session

From the Desk of Kimmy Sokoloff

No reprieve from the selling today, an ugly one overall.

$SPY is nearing its 200-day moving average.

It might be a wild day tomorrow, too.

From the Desk of Alfonso Depablos @Alfcharts

Sellers have a hold on equity markets as internal weakness expands and downside momentum picks up.

When looking for evidence of additional downside risk, some of the most valuable information we have is in the price action of the weakest areas. The rationale is that they should break down first and lead the rest of the market lower.

With how poorly the smallest stocks have performed this year, the Russell Microcap Index $IWC is the perfect signpost to help us determine the next move for stocks. 

The chart below shows IWC resolving to the downside from a descending triangle formation. It just closed at its lowest level in roughly three years.

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