From the desk of Steve Strazza @Sstrazza

Our Top 10 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.

Momentum Rebalance Heavy On Financials

One of the big lessons investors have been taught this year is that Growth is not Momentum. For many years, Growth-oriented sectors held the reigns of Momentum strategies. But that's not because the two are synonymous in any fundamental way. It's simply because growth stocks have been where the momentum is. In other words, they've been going up!

Well, that's changing and this is yet another data point that supports this view. After MSCI’s semi-annual rebalance of the Momentum Factor ETF $MTUM, Technology has shrunk from a 41% to 18% weighting, while Financials’ weighting has shot up from a measly 2% to 32%. Moreover, both Consumer Discretionary and Communications have shrunk in their weighting, while the other Value sectors - Industrials, Materials, and Energy - now represent a far more significant portion of the ETF.    

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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 context of the big picture 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:

• Our Macro Universe continued its strength this week as over 77% of our list closed higher with a median return of 0.50%.
• Crude Oil was the strongest, closing out the week with a 5% gain as it trades at its highest level in several years.
• The biggest loser of the week was Copper losing over 3%.
  • Check out this...

From the desk of Steve Strazza @Sstrazza

We held our June Monthly Strategy Session this past Thursday night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month. 

By focusing on long-term, monthly charts the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a "big-picture" point of view.

With that as our backdrop, let's dive right in and discuss three of the most important charts and/or themes from this month's call.

We've been talking a lot about crypto markets lately.

In fact, we just launched a new column exclusively for this emerging asset class.

As JC mentioned this morning, we've found quite the winning formula in selfishly pursuing projects and creating content that WE like. Fortunately, it usually turns out that our readers and clients think what we do is cool and valuable too.

Just like our new Saturday Morning Chartoons, everything we're doing with crypto lately is another great example of this self-serving strategy of ours.

Along those lines, we just created a custom index for cryptocurrency that we think is pretty damn neat. It also got us thinking about something...

Everything you see us do here is an incredibly selfish endeavor.

We build the tools that WE think are helpful. We build the scans and strategies that WE find valuable.

All the money we reinvest in people and technology are to accomplish OUR goals.

That's been our mission since day 1: Keep it selfish. Do what WE think adds value to OUR process.

And as it turns out, all of you agree with most of what we do. You ALSO think those tools and strategies are valuable and/or cool.

I've had a front row seat to this beautiful phenomenon for over a decade.

So when we're having talks internally about upcoming projects, I find myself always reverting to that:

Do WE think it's cool?

Do WE think it adds value?

For me, it's not just about one indicator or one chart.

It's a weight of the evidence game.

Since March, the bet has been Messy For Longer. We've expected a choppy environment. That's what the weight-of-the-evidence and history suggested.

But now what? Are these consolidations going to resolve lower? Or Higher? Or just stay messy for even longer?

That's what makes this all so great. I don't know. And neither do you. No one does.

It's a beautiful thing.

So as I weigh the evidence to decide rollover or breakout, I come to a series of divergences that put this stock market in quite the predicament.

With S&Ps and major indexes hovering near all-time highs, we're just not seeing it from the components themselves. Here's the Russell3000, for instance, seeing fewer and fewer new highs:

So there you have it folks, here's your Crude Oil breakout.

It was bound to happen right? It kept pushing up against those former highs.

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

As May just came to a close, many spent the weekend celebrating the kick-off to the Summer season at Memorial day barbeques. We did that too. BUT... being the nerds we are, we also spent much of the weekend pouring over some fresh monthly candles now that yet another one is in the books.

In the spirit of our sacred monthly candlestick process here at Allstar Charts, in this week's column, we're going to take a step back and discuss some of the primary trends at play in Commodities Markets.

We only get this incredibly valuable information ONCE a month. That's right. Just TWELVE times a year. As such, we really cherish weeks like these. 

So, let's dive right in and talk about one of the charts that really stuck out this month: None other than the good old Thomson Reuters $CRB Index, arguably the broadest barometer for the asset class as a whole.

From the desk of Willie Delwiche.

While new highs are being seen around the world (Europe, Frontier Markets) and in the US (Broker/Dealers, Real Estate, Energy), there is still plenty of attention on former leaders who are trying to reclaim their lost glory. A great example of that is the ARK Innovation ETF (ARKK). This fund peaked at the height of speculative fever in February and has since made a series of lower highs and lower lows. It’s now dealing with rejection as its latest rally attempt petered out shy of the confluence of the 50 and 200-day moving averages. When viewed in context of overall declining NASDAQ volume, it suggests stronger hands have been selling to weaker hands and they are the ones that are going to be left paying the tab at the end of the night. 

This is the video recording of our June 4, 2021 All Star Charts Crypto Weekly Charting Session.

The team at All Star Charts has started putting out a new report called "Follow the Flow." The goal of this report is to "create a universe of stocks that experienced the most unusual options activity – either bullish or bearish… but NOT both."

The unusual activity we're witnessing in these stocks is not necessarily "smart" money, but "aggressive" or "motivated" money. This is a useful signal.

With this in mind, one of the names mentioned in the most recent report caught my eye for a shorter duration bullish options bet.

With the Dow Jones Transportation Average hitting our upside targets last month, it's become a wait and see game. 

Are consolidations resolving higher, like they were before? Or are they resolving lower?

Based on the overwhelming amount of evidence, the bet we want to make as that Transports resolve lower, and join some of the other areas that have already been under pressure for months, like Tech and Small-caps.

When going through the components of this index, there were 6 names in particular that presented the best risk vs reward opportunities on the short side.

The first one Southwest Airlines. This looks like a top to me. How I learned it was to buy the smiley faces and sell the frowny faces.

If we're below 59, we want to be short $LUV with a target near 48.50, which represents all that former resistance last year.

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