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.
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.
Energy stocks have been the best-performing group thus far during the second half of 2023. However, they have given back some of their gains in recent weeks as selling pressure resurfaces.
With energy indexes rolling over at their old highs yet again, the question we’re asking (and have been asking) is simple…
What is it going to take for these stocks to finally break out?
Here is a dual-pane chart showing the Equal-Weight Energy Sector testing the upper bounds of a multi-month basing pattern on both absolute and relative terms.
Rising rates have been a worldwide phenomenon for the last two and a half years as yields have climbed non-stop.
Not only are we seeing the curve in the US reach decade-long highs, but the benchmark yields in Germany, France, Spain, and even Japan are also trading at multi-year highs.
Below is the US 10-year Yield reaching its highest level since 2007 after breaking out of a multi-month base three weeks ago.
Sellers have a hold on equity markets as internal weakness expands and downside momentum picks up.
When looking for evidence of additional downside risk, some of the most valuable information we have is in the price action of the weakest areas. The rationale is that they should break down first and lead the rest of the market lower.
With how poorly the smallest stocks have performed this year, the Russell Microcap Index $IWC is the perfect signpost to help us determine the next move for stocks.
The chart below shows IWC resolving to the downside from a descending triangle formation. It just closed at its lowest level in roughly three years.
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.
Coming into July, the Nasdaq 100 had already achieved record-setting returns through the first six months of the year. Over the past quarter, however, the trend has cooled off as stocks have struggled with overhead supply.
The same could be said for the relative trend as growth stocks have paused their advance versus the overall market.
The chart below shows the Nasdaq 100 versus Russell 3000 ratio coiling beneath a critical level of interest.
The stock market has been under duress for the past two months as bears have taken control and driven the major averages to their lowest levels since early June.
Whether you look at the large-cap indexes or the strongest sectors and industry groups, they are all stuck below overhead supply.
And with price action continuing to deteriorate, many of these charts are now carving out potential short-term tops.
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.
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.
From the desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.
We've also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It's got all the big names and more–but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let's dive in and take a look at some of the most important stocks from around the world.
