From the desk of Steve Strazza @Sstrazza.

Welcome to the latest edition of Under the Hood, where we'll cover all the action for the week ended July 22, 2022. We publish this report bi-weekly and rotate it 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.

From the desk of Steve Strazza @sstrazza

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.

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.

Materials Hook Higher

Procyclical areas of the stock market are bouncing back after the recent bout of selling pressure. The Equal-Weight Materials ETF RTM is a prime example as it reclaims a critical level of former support. Now that these raw material and commodity-related stocks are back within their prior ranges, we're watching commodities closely to see if they follow suit. As long as RTM is holding above its shelf of former lows from last year, our equal-weight commodity index is most likely finding support at its respective level. On the flip side, the search for a floor in commodities is likely to continue if the recent rebound in materials is only a dead cat bounce. Ultimately, these two charts should resolve in the same direction.

Key Takeaway:

• Fed in spotlight as Powell & Co move rates to last cycle’s peak.
• A dovish pivot when financial stress has never been lower seems unlikely.
• Persistent bear market leaves bulls needing to prove their case.

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:

Ok, maybe that title is a little dramatic. I couldn't help myself. I recently had a conversation with a trader friend who was dunking on Gold Bugs about the lack of income stream from Gold. It's just a damn rock! he said.

Anyway, I don't have any strong opinions about Gold either way. I just like to follow price and volatility. And right now, the options market may be offering us a tempting opportunity to collect some premium as the recent gold selloff has spooked the gold bulls a little bit.

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

We closed a position for a profit in the Paid-to-Play portfolio today:

From the desk of Louis Sykes @haumicharts

Last week, we advocated again for a patient approach.

We remain cautious about buying too heavily into short-term breakouts. This is a tape where whipsaws and fake-outs can be anticipated.

Many names find themselves firmly below overhead supply, and we expect any short-term strength to be aggressively sold into.

In the depths of this most recent drawdown, market participants were approaching their maximum pain thresholds. It makes sense that the market finds supply from holders looking to break even on their losses.

There are two ways to approach this tape from a trading perspective:

We’ve seen very little insider activity the past few weeks and today is no different, as we have just a single Form 4 on our Hot List.

This lack of interest is reflected in the ratio of insider sells to insider buys, which just hit its highest level since early 2021.

This to me is the big one.

The chart below is the one I'm watching the closest.

You guys have been hearing me pound the table about the US Dollar and what a hard time stocks and crypto will (continue to) have in a stronger Dollar environment.

So here you have it. This is the Emerging Markets ETF $CEW back to the same level where it bottomed out the only 2 other times it was ever down here:

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.