Strazza Archives - All Star Charts

Commodities Weekly: Base Metals Slice Through the Market Chop

July 30, 2021 by Ian Culley

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

We can’t ignore the resiliency in base metals.

Despite the classic year-two chop, base metals have remained buoyant while many other risk assets have come under pressure. They’ve even gained ground during the recent bout of US dollar strength.

And now we’re beginning to see signs of serious leadership emerge as Crude Oil consolidates its recent gains. The broad-based strength beneath the surface for this procyclical group of commodities has been undeniable. These risk-on metals have been the steadiest performers within the entire asset class for the better part of this year.

Steel has relentlessly pushed to new highs –we can’t wait to see those monthly candles! Tin followed through to the upside after last week’s breakout to new all-time highs. Even Copper has enjoyed a strong week as it challenges its 2011 all-time highs.

If the global growth narrative is going to take back off, we’d expect to see this kind of strength from industrial metals.

Now let’s take a look at a couple of metals that are leading the charge recently: Aluminum and Nickel. [Read more…]

Don’t Hold Your Breadth

July 29, 2021 by Steve Strazza

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

We’ve been super obnoxious about the deterioration in new highs we continue to see in the US.

But the major averages haven’t been phased a bit. The S&P 500 and other large-cap indexes keep charging to new heights.

Yet when we look beneath the surface, we’re hearing a different story… The vast majority of stocks have NOT been making new highs along with the averages. In fact, we’rebeginning to see an expansion in new lows.

This is a new development that’s commanding our attention right now, mainly because these are the weakest conditions we’ve seen many of our breadth measures since last year.

At the same time (and just like JC mentioned in his note from yesterday) we’ve already seen a stealth correction for the better part of this year!

Most stocks are simply NOT making new highs, and haven’t done so since Q1. Plenty more are trending sideways and have already been consolidating for months.

Perhaps we’ve already seen the market correct beneath the surface. Maybe that was it…

[Read more…]

RPP Report: Review. Preview. Profit. (Q3 Playbook Update)

July 28, 2021 by Steve Strazza

From the desk of Steve Strazza @sstrazza

We’re going to flip the script a bit this week with our RPP Report. We typically don’t publish a report during week’s where we have a monthly conference call as JC covers our positioning and summarizes our key themes and views there.

But we didn’t do one last week either because we had just published our Q3 Playbook which laid out our current position in a painfully detailed manner (it was 250 pages!).

Premium members: read it here if you haven’t yet.

In today’s post, we’re simply going to recap our “Key Themes For The Current Quarter” and update clients on some major developments that have taken place in the past few weeks.

We’ve got some important things to cover so let’s get right to it!

[Read more…]

Defense Wins Championships

July 27, 2021 by Ian Culley

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley The current market environment demands that we adhere to our risk management protocols as strictly as ever. It’s a mess out there! And with each passing day, more and more signs point to these challenging conditions persisting. There is one data point in particular that we believe is likely to remain a serious headwind for risk assets: continued strength from the US Dollar. We’ve covered this theme in detail the past couple of months as USD has rebounded against just about every major currency we track. As always, we will continue to monitor the dollar as it is a vital piece to the intermarket puzzle. Put simply, when investors are seeking safety in the dollar, it’s usually happening in an environment where stocks are under pressure. Last week, we highlighted the violation of a key pivot low in our G-10 Ex-US Currency Index. This week, we’ll revisit that chart, but with a slight twist, and then illustrate this broad USD strength using our updated trend summary table. [Read more…]

Follow The Flow (07-26-2021)

July 26, 2021 by Steve Strazza

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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.

[Read more…]

Under The Hood (07-26-2021)

July 26, 2021 by Steve Strazza

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest “Under The Hood” column where we’ll cover all the action for the week ended July 23, 2021. This report is published bi-weekly and rotated on-and-off with our “Minor Leaguers” column.

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.

Watch this video for a “behind the scenes” look at our process.

Whether we’re measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers… there is a lot of overlap.

The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we’re producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.

[Read more…]

[PLUS] Weekly Momentum Report & Takeaways

July 25, 2021 by Steve Strazza

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. [Read more…]

[PLUS] Weekly Top 10 Report

July 25, 2021 by Steve Strazza

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.

Mixed Signals From Modern Dow Theory

This week’s new highs for the major averages lacked confirmation from their peer indices once again. A topic we often discuss is “Modern Dow Theory.” That is, instead of solely evaluating Transports and Industrials for a reading on the broader market, we should also consider the performance of Semiconductors as they’ve become the modern medium for economic transportation.

Despite the Dow Industrials ripping back to close this volatile week out at fresh highs, we’re still not seeing any confirmation from either of these critical indexes. And when we look at the Transportation Average, there is reason for concern as we’ve seen nothing but steady weakness since prices peaked in early May. As for semis, they continue to hold their own but remain trapped in a holding pattern beneath their April highs.

A decisive move above 450 in the Semiconductor Index would go a long way in supporting the latest highs from the Dow and other large-cap averages.