We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
The Scales are more balanced than last month but are still tipped toward risk and away from opportunity.
Macro folks are sorting out just how bearish they need to get while market folks are trying to figure out just how bullish they should get. From my perspective, less macro-related volatility could help stocks build on their October gains heading into year end. But there isn’t much evidence of that taking place just yet. With that, the inability of the recent rally to show sustainable strength (and more new highs than new lows) suggests caution remains warranted.
Our Weight of the Evidence Dashboard fills in the details and includes a few charts that have our attention heading into November.
As technicians, we pride ourselves on never being dogmatic in our approach. If new data that invalidates our initial thesis presents itself, we're always willing to flip our approach.
Yesterday, we wrote that Ethereum testing a significant support zone suggests this rally is mean-reverting in nature. In that same breath, though, we noted that it's wise to treat every chart on its own merits.
If you adopt an overly broad picture of markets, you'll often miss some of the most straightforward trading opportunities.
With all that said, a few names are shaping up nicely in this tape.
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.
Welcome to Under the Hood, where we'll cover all the action for the week ended October 28, 2022. This report is published bi-weekly and rotated with our 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.
