We held our November Monthly Strategy Session Monday 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 use various bottom-up tools and scans internally to complement our top-down approach.
One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there.
We are only interested in the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
“Why do you rob banks?” authorities asked notorious bank thief Willie Sutton.
His response: “Because that’s where the money is.”
We're not planning on robbing anybody, but if today's trade plays out like we think it can, it might feel like we're stealing. Only, we won't need to worry about the authorities coming after us, nor will we need to feel bad about it.
Our Analyst Willie Delwiche says that a basic requirement for many bullish ideas right now is that any stock or ETF in question needs to be above August highs. Anything below August highs is subject to a rude reversal. I'm on board with this line of thinking.
So, today's trade is in an American bank that is above its August high and showing signs of wanting more.
Am I tinkering with new ideas, new money management algorithms, new mindsets, new products, new timeframes, or new workflows?
We don’t need to be trying all new things all the time. But spending time thinking about divergent ideas is a valuable practice.
When we exercise our creative muscles, we might find nothing other than a journey down an empty rabbit hole. But sometimes, we have epiphany moments that change the way we operate. These can be minor, value-added ways – or maybe even drastic, wholesale change kinds of ways.
Sentiment, volatility, and momentum thrusts have all suggested an end to the US dollar wrecking ball. But price hasn’t indicated any significant weakness in the structural trend.
The absence of confirming price action has made it impossible to take a bearish USD stance.
It's nearly impossible to switch off when you're invested in crypto.
I'm a little jealous of those solely involved with legacy markets; it must be nice to have an off-switch. In this part of the financial world, there's always something happening.
And my passion for the space often makes it difficult for me to let go.
But, last weekend, my hand -- indeed, my whole body -- was forced. A night in the ER and a few days bedridden with a gnarly viral infection overwhelmed my ardor for fake internet coins.
Happy to report I'm recovering. And here's me after I stumbled to my computer to catch up on the action:
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 Trade Exchange. 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'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.
