Today's trade is in a steel sector name that recently poked its head above a resistance level that had been capping the upside for over two years now.
As the stock consolidates its recent breakout, options premiums are quite low, offering us the opportunity to position in some longer-dated calls for a simple bet on higher prices.
Back in the late 1800s, Charlie Dow was a journalist in Springfield Massachusetts.
His job was to write about the stock market. But when he would go knocking on doors asking companies questions, they would tell him, "Our business is none of your business".
So how could poor Charlie do his job then?
Well, he concluded that there was a better way to do this.
He recognized that there were a select group of stocks that, "Made the goods", and he called those the Industrials.
And then there was the group of companies that, "Delivered those goods". At the time, they were the Railroads.
If one of these groups of stocks were going up in price, and so was the other group, then things are moving in a positive direction together. Those were good signs for the market.
It was specifically when one of those groups were rising, but the other one wasn't, that something was likely wrong.
Both Bitcoin and Ethereum have surpassed psychological levels of $50,000 and $3,000, respectively, following impressive rallies. Now, the risk versus reward scenario tilts towards the speculative end, as indicated by our breadth metrics, which highlight increasing activity within the altcoin space. Simultaneously, equity markets confront a challenging seasonal period amidst a backdrop of a strong dollar.
Welcome back to Under the Hood, where we'll cover all the action for the week ended February 16, 2024. This report is published bi-weekly, in rotation 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.
