The market had a nice move this morning, and then we pulled in when $SPY moved above the 437 level.
Either this recent move needs a rest and consolidation, or we’re pulling in further.
Expert technical analysis of financial markets by JC Parets
by David
From the Desk of Kimmy Sokoloff
The market had a nice move this morning, and then we pulled in when $SPY moved above the 437 level.
Either this recent move needs a rest and consolidation, or we’re pulling in further.
From the Desk of Alfonso Depablos @Alfcharts
As the market has been sending mixed signals since July, we’re seeking information from our risk appetite indicators to try to gauge the next move.
One of our favorite ways to measure risk appetite is to compare the consumer discretionary sector with consumer staples. This tells us whether market participants are positioning themselves defensively, or embracing risk.
Discretionary stocks include automobiles, retailers, and homebuilders, among other things. Theoretically, we’re talking about products and services consumers buy with their discretionary incomes.
Meanwhile, staples are what “consumers” will buy regardless of how bad economic conditions get… things like food, toothpaste, cigarettes, etc.
When this ratio points higher, it illustrates a healthy degree of risk-seeking behavior among investors. Alternatively, when it points downwards, it speaks to a defensive tone and typically occurs during bear markets.
by David
From the Desk of Steve Strazza and Alfonso Depablos
With investors and executives scrambling to figure out what the geopolitical events of the weekend mean for their portfolios and companies, all was silent on the insider filings front.
There were no Form 4s, Form 13s, or political reports that meet our materiality threshold.
by David
From the Desk of Kimmy Sokoloff
Futures are bright this morning.
I mentioned yesterday that there’s potential to 438 on $SPY.
by JC
Are you ready for the end of the year squeeze?
Many investors think it’s not coming and that the market is going to crash instead.
In fact, CTAs have never been this short. The last few times they were anywhere near this bearish, stocks went on to have some of the greatest rallies in history. I remember them well: [Read more…]
From the Desk of Alfonso Depablos @Alfcharts
Relative strength is one of the most essential tools we employ on a daily basis.
Analyzing relative trends allows us to determine whether an asset is outperforming a benchmark or its alternatives.
This increases our chances of success as we navigate the markets.
Even though the stock market has been trading sideways since July, the relative trends are very much in favor of technology these days.
Below is the equal-weight Technology Sector (RSPT) breaking out of a 3-year base relative to the equal-weight S&P 500 (RSP):
From the Desk of Steve Strazza @Sstrazza
Welcome to our latest Minor Leaguers report.
We’ve had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
We expanded our universe to include some mid-caps.
To make the cut for our 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 and Alfonso Depablos @Alfcharts
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.
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.