This is the video recording of the January 2022 Mid-month Conference Call.
From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge
One of the most important themes these days is the rotation between growth and value stocks. Groups like energy and financials have been breaking to new highs while growth and tech indexes have come under serious pressure.
So far, 2022 has been a true tale of two markets.
While cyclicals and value stocks appear to be gearing up for a momentous year, it looks like the party is finally coming to an end for the growth trade.
We want to lean on the value-heavy leadership groups for long opportunities in 2022. As for growth, we think it’s likely to remain messy as interest rates continue to rise.
When we look beneath the surface at growth and value stocks right now, our breadth data is confirming the action we’re seeing at the sector level.
Let’s dive in and discuss…
On this episode of Pardon The Price Action, we’re talking about the implications of rising interest rates. This is no longer an environment where Growth stocks outperform. It’s actually the exact opposite.
We’re also seeing these signs from other countries around the world with much more exposure to the Value sectors like Energy, Materials, Industrials and Financials.
US Investors have a lot more exposure to Technology and Growth than almost every other country in the world.
I think Latin America is worth watching, China and many other emerging markets.
We believe this time IS different!
Check out the full video:
Over the last quarter, we saw the market really struggle to pick a direction and get going. There were a lot of sideways moves and a lot of failed breakdowns. Currently, we’ve seen a resumption in the positive trend in most sectors, supported by market breadth.
Today we’re taking a look at stocks from the Industrial Manufacturing sector. A handful of stocks are signifying what could be a good bullish going forward.
So let’s see what we have today!
What if the outperformance we’ve seen from the United States stock market for so long is behind us?
Is your portfolio prepared for an environment where US stocks underperform the rest of the world?
What about your peers?
Do you think Financial Advisors across the country have positioned their clients to take advantage of outsized returns outside the United States?
I talk to a lot of people.
And my answer is no. A big fat obnoxious NO.
I don’t think they’re ready at all. And the pain could last a while.
By the time your average financial advisor gets off the golf course and notices how poorly positioned their clients are, it’s usually much later in the cycle. [Read more…]
From the desk of Steve Strazza @Sstrazza
Welcome to our latest Minor Leaguers report.
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 it’s time we branch out a bit and allow some new stocks to find their way onto our list.
The way we’re doing this is simple…
To make the cut for our new Minor Leaguers list, a company must have a market cap between $1 and $4B. And it doesn’t have to be a Russell component–it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.
The same price and liquidity filters are applied. Then, as always, we sort by proximity to new highs in order to focus on the best players. But instead of all-time highs, we’re sorting by 52-week highs these days as we don’t want to discriminate against energy or other cyclical stocks.
The goal is still to catch the strongest names while they’re small and have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge. We’re looking at up to 10x moves just to break into large-cap land!
Let’s dive into this week’s report and see what’s happening in some of the hottest stocks in the Minor Leagues.
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.
What remains is a list of stocks that large financial institutions are putting big money behind… and they’re doing so for one reason only: because they think the stock is about to move in their direction and make them a pretty penny.
Then we flip through our list of stocks flashing unusual activity and pick the best setups using many of the same technical filters we do for our other scans. And just like that, we’ll follow the money flow and fatten our own pockets along with some of the world’s most powerful financial institutions.
The market has been different over the past two weeks compared to the past two months. We’re seeing a resumption in trend in several sectors and today Fertilizers are in focus.
Let’s take a look at the trade for this week!