G7 central banks are cutting rates – first Canada and now the European Union.
Will the Federal Reserve follow suit in the coming months?
Investors seem to think so…
US 30-year T-bond futures have posted positive returns six days in a row – their longest winning streak since April last year.
T-bonds also broke above a key polarity zone, triggering our buy signals from last month:
I’ve made clear my disdain for buying treasuries, so the long bond trade will likely be a winner. After all, the best trades are often the hardest to take.
As most of you know, we use various bottom-up tools and scans to complement our top-down approach.
It's really been working for us!
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 only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
The US Dollar Index $DXY is violating its year-to-date trendline.
Is this it? Will the dollar finally follow the breakdowns in crude oil and interest rates?
The forex markets say, “Not so fast…”
Following yesterday’s breakout, the British pound is slipping back into the box as the greenback digs in its heels:
Fading the failed GBP/USD breakout earlier this spring proved rewarding. If you’re feeling spicy, you can take another shot at a mean reversion toward 1.25 – but only if the pound is trading below 1.2750.
By the time the S&P500 hit its final low in October, there weren't many stocks at all left going down. Most of them had already been making higher lows and higher highs.
The thought process was that if these groups were above their late 2021-early 2022 highs, then any correction in stocks, whether through time or through price, would be just that - only a correction, but within the context of an ongoing bull market.
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 now, a company must have a market cap between $1 and $4B.
[Note: We entered this trade on June 4th following the entry trigger. Details below]
On today's Flow Show, Steve Strazza brought the heat.
It appears Bitcoin is about to start another leg higher. It's showing all the signs: A tightening consolidation on the verge of an upside resolution. And with the 100,000 level on the watch list of every professional and amateur market speculator, it's hard to believe that the next bullish breakout does not include a run to and through this highly watched level.
Despite some messy action from the broader market in recent months, risk appetite remains elevated.
How do we know?
The stocks that investors are betting against the most are making big moves... to the upside.
And we know just what to do in these environments.
We look to our freshly squeezed universe and find the most heavily shorted stocks. We wait for momentum to come into these names, and we ride them higher while the shorts get squeezed.
We got new short data recently, so let's talk about how we're playing it.
Our scan is quite simple. It is designed to identify stocks with the most aggressive short positions. When a stock is shorted, it means incremental buyers are waiting in the wings to close out their bearish bets.
We love this, as new buyers are the one true catalyst for higher prices.
When shorts are proven wrong, they become buyers of the stock. In many cases, this happens as momentum flows into these names and fuels massive short-covering rallies.
