From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Momentum thrusts abound.
The other day on Twitter Spaces, JC made the point that we hadn’t seen many bullish thrusts this year. He was right. There have been a handful of obscure ones, but nothing really stands out. Until now…
Last week, the High-Yield Bond ETF $HYG registered its largest single-day rate of change since spring 2020.
Not bearish, right?
Then, yesterday, copper futures followed this up by rallying over 5% and booking their largest daily gain in almost a decade.
Also, not bearish.
These types of strong momentum thrusts tend to kick off new uptrends.
We just covered the action in HYG and highlighted the major bottoms that formed under similar momentum conditions.
Today, we’re going to review yesterday’s thrust in Dr. Copper and discuss what a sustained rally from here could mean for risk assets.
Let’s dive in!
Here’s a chart of copper futures with a one-day rate of change in the lower pane:
Our Hall of Famers list is composed of the 150 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.
The Hall of Famers is simple.
We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Back in January, the big story was the yield on the 10-year US Treasury note printing new multi-year highs.
At the time, other benchmark yields worldwide were also resolving higher, completing large bases.
This was confirming evidence that added to our conviction US yields were headed higher and that we were in the early stages of a rising rate environment.
The confirmation from global yields proved valuable information.
Almost six months later, the US benchmark is just below 3.00%. As it pauses below a critical level, we again turn to overseas rates to get a read on the potential near-term direction of the 10-year yield.
And just like earlier in the year, they’re pointing higher.
The bears are getting creative with their theories.
You notice?
And there are a lot of bears out there. More than we've seen in a long, long time depending on how exactly you're counting them.
So the big question is whether we've seen A bottom or if we've seen THE bottom.
And the truth is no one knows until after the fact.
All we can do is continue to collect the data as it comes in and make the best decisions with incomplete information.
The first thing that needs to happen before stocks can go up, is that they need to stop going down.
That's just math.
And what's interesting is that with lower lows in the price of most major U.S. Indexes a couple of weeks ago, fewer stocks were actually able to make new lows....
Mea Culpa --- I'm letting this post stand because it offers two good lessons for traders:
1. The risk management laid out below is how I manage long calls heading into expiration. So anyone holding a similar position will benefit from this or a similar risk management plan.
2. It offers a lesson on keeping good records. I messed up. For ASO subscribers, we're actually in the September calls, NOT JUNE CALLS. We have plenty of time until our position expires and therefore we actually don't need to do anything here yet but enjoy our #FreeRide. The confusion for me is that I also have June calls on in my personal portfolio and I did not take careful notes in my personal spreadsheet. And when reviewing, I accidentally confused these June calls as part of the position we put on for ASO. So, yes, I personally will be exiting my June calls soon (as laid out below). But for those of you who followed me into our September calls trade, we've got time.
