We’ve already had some great trades come out of this small-cap-focused column since we launched it late last year and started rotating it with our flagship bottom-up scan, “Under The Hood.”
We recently decided to expand our universe to include some mid-caps…
For about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but we think it’s time we branch out a bit and allow some new stocks to find their way onto our list.
Shame on me for using the word "Hope" in the headline for this post, but I cannot resist a good pun ;)
We've got a play here in an old school Aerospace & Defense company that is on the verge of making new all-time highs. And it just so happens it's approaching the magical $100 a share price point that often tends to act as a price magnet. We call this the hundred-dolla-roll!
Scouring our charts this morning, we couldn't help see that a lot of coins are getting tight out there.
With this volatility contraction, a big move could be on the cards, in either direction...
Big names like Cardano and Avalanche are wedged in contracting consolidation patterns. The resolution from these will likely set the stage for the coming weeks ahead.
And when we look to Bitcoin, prices have been in a very tight range, and this morning seems to be breaking higher.
Compressions like these tend to proceed quick and violent moves, just like the volatility contraction that we were writing about at the end of July before Bitcoin's monster rally off its lows.
This week we’re looking at a long setup in the Auto sector. We're seeing strength come through in the Auto segment and thought of taking a look at a stock that's ripe for a bullish move.
We retired our "Five Bull Market Barometers" in mid-July last year 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.
One of the first things you learn in Technical Analysis is that markets are fractal.
That means that you'll find the same human behaviors (i.e. price patterns) whether you're looking at daily timeframes, weekly time frames or even intraday (e.g. 10-min or 30-min candles).
This is a concept that Brian Shannon has done an amazing job of highlighting throughout his career. Brian has been an inspiration to me since about 2005, which is pretty unbelievable to think about. Since then we've become friends and go skiing together and all that. It's pretty cool how life works sometimes.
Anyway, the idea behind "Multiple Timeframes", which is literally part of the title of Brian's book (go buy it), is to use this reality of "markets being fractal" to our advantage.
That can mean a lot of different things to different people.
For us, in what we do here at All Star Charts is, we start with Weekly and Monthly time horizons. That's where it all begins.
We've been discussing Covid for so long now, that it feels as though it's been going on forever. It carried out massive damage across different segments. But we are now seeing a resumption in trends that have been in place long enough to call them trends.
As we know, travel had been largely affected by the pandemic. Getting out of the house to buy groceries became the new travel plan! But not anymore!
We're now witnessing a strong and consistent pick-up in flight and hotel bookings which means that we can start taking a look at the shares that belong to these categories as well!
So let's do just that.
First up, let's take a look at the custom Leisure Index that we track at ASC.
As can be seen from the chart below, the custom Leisure Index is at a crucial level. Currently trading close to its 2019 highs, the index seems ready to break out soon. And why is it that we think so?
Because there are signals that are coming through from the constituents of the index that suggest so.
Presenting to you, dear readers, the Never Say Never series. Here we will discuss all those topics that a typical market participant thinks could never happen. I am a strong believer in faith and everything but I also know to never challenge the universe - in our case: the market.
I learned early on, that biases are a natural by-product of the human mind. Everyone has them, in some form or the other. But one ought to leave these biases right outside the door before entering the market. Because as soon as you believe that something could never happen, most often it does.
I had a client ask me incessantly what the next major support of a particular stock was, and after ten revisions, I said 0. "Your maximum risk is if the stock goes to 0". He stared at me, his mouth agape with incredulity.
Cut to today, where I cannot make that statement again. You see, Crude Oil traded below 0. And that changed the very idea most people believed in, me included.
So here we are today to discuss with you things in the market that may leave you astounded.
One thing unique about the market is that the game is never over. There aren't four 15-min quarters or two 20-min halves like in sports.
In those endeavors there is a beginning and an end.
You know who won (or who tied in some cases). But the match is over, and there will be another one in a few days or a few months, depending on the sport.
In the market, it never ends. This can cause issues psychologically, so it's something we should all be aware of and keep in mind.
But if you ask me, currently the bulls are scoring a lot more points. This is the first time we've seen that since Q1 this year, when the bears started running up the score.
Look at the S&P500 break out to new all-time highs relative to US Treasury Bonds.
Our Hall of Famers list is composed of the 100 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft -- with market caps in excess of $2T -- to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It’s got all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we’re developing a separate universe for that, and we’ll be sharing it with you soon.
So, The Hall of Famers is easy.
We simply take our list of 100 names and then apply our technical filters in a way that the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
