Monday night we held our August Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
During our morning Analyst meeting today, the team was looking across a variety of asset classes and sectors to identify the current leaders, and those likely to continue tracking higher if the broader stock market rally is for real.
One sector that stood out starkly was Big Pharma.
There are some monster bases in the process of resolving higher here.
One of the common criticisms of technical analysis is that it's all self-fulfilling prophecy.
Its proponents argue that technical analysis doesn't work by understanding underlying supply and demand dynamics.
Rather, it operates on a single dimension, where market events are caused either directly or indirectly by a preceding prediction by technician that it was going to perform a certain way.
An intuitive example of the self-fulfilling prophecy hypothesis (SFP) is the classic technical analysis principle of support and resistance.
Those who favor SFP argue that markets only sell off at resistance and bottom at support because other traders identified these levels and acted according to technical analysis principles.
After all, a self-fulfilling prophecy is defined as a person or a group's expectation for the behavior of another group bringing about the expected behavior.
I had a blast chatting about some of my favorite charts and what we’re seeing in crypto, the major averages, small-caps, crude, and a lot more. We covered a lot of ground, hitting on some of the most important market themes right now.
Dividend Aristocrats are easily some of the most desirable investments on Wall Street.
These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.
As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.
Here at All Star Charts, we like to stay ahead of the curve. That's why we're turning our attention to the future aristocrats.
In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.
We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money."
Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
As I scrolled through my currency charts this weekend, the same three-word phrase kept popping to mind: "Can’t be short!"
Whether it’s the Swiss franc, the British pound, or the Thai baht, we can’t be short most global currencies against the US dollar. Not at current levels.
If it walks like a duck and quacks like duck, then it's probably not a chicken.
That's how I look at what is potentially year 3 of a new bull market.
Look at all the most important cycle bottoms in stock market history.
You'll notice the powerful thrust in year 1, followed by a messy digestion of those gains in year 2. And then all those bull markets resumed in year 3:
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.
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.
