From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
The US Dollar trading at key levels against a significant amount of Developed and Emerging Market currencies is the major theme in Currency Markets right now.
The GBP/USD is challenging an area of resistance that acted as support for over two decades but has been a barrier for prices since the Brexit vote almost 5 years ago.
The USD/CHF is on the verge of completing a massive 9-year top.
The USD/ZAR just violated critical support at a decade-long trend line.
And USD/CAD is currently attempting to complete a 5-year double top... with a pattern that looks strikingly similar to that of the DXY Index itself.
What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
It's Saturday Morning Chartoons time. You can read more about the reasoning behind this post here.
We're just interested in aggregating all of the charts we put together throughout the week and organizing them all into one, easy to flip through deck.
One thing that stood out to me this week is the lack of deterioration underneath the surface.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Softs are an area of the commodity space that hasn’t received much attention over the past several months, and for good reason.
As the rest of the commodities complex has been on fire, the action from this group has been muted as they’ve underperformed their peers significantly since last year.
Besides Sugar reaching our initial objective last month and Coffee breaking out of a 4-year bottom, Softs have been a real snooze fest.
Cotton continues to chop within a broad range. Cocoa is well below overhead supply. And OJ grinds sideways as it builds a 3-year base.
But it looks like Orange Juice futures are poised to break free to the upside.
Let’s take a closer look at this favorable risk/reward opportunity in OJ and lay out a potential trade setup to get long this base breakout, if and when it comes...
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 5-9 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 & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
It's not happening at a random spot either. The upside objectives were hit, as we discussed on last week's call, so this would be a perfectly logical place for this correction to take place.
But the chart of the week has to be Homies relative to REITs. With Real Estate Investment Trusts (REITs) breaking out on both an absolute AND relative basis, it makes this chart that much more dramatic.
Something we’ve been working on internally is using various 'bottoms-up' tools and scans 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 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.
Welcome to our latest RPP Report, where we publish return tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.
Seems there has been a lot of talk about the stock market "pausing" or being "due for a correction."
While I see the same things the bears are seeing, I'm also seeing price action in a variety of corners of the market still telling a bullish story. And as we like to say around here: "Only Price Pays" (h/t @alphatrends).
We're also seeing bullish options flow from several "motivated" and "aggressive" traders in a variety of names. Case in point: a software storage name in our most recent Follow the Flow report caught my attention.
Back then, we were already leaning toward "NO." Fast forward to today, and it's more like a "NO WAY."
The reason for this is simple. In that post, we explained the line in the sand for our USD/BRICS Index was ~19.
In the few weeks since, this critical level has been violated. The market has spoken, and it's saying we're in for a lower US Dollar relative to BRIC-country currencies.
Key takeaway: Excessive optimism has been slow to unwind and most of our indicators are back to signalling a high risk environment from a sentiment perspective. Individual investors last week showed the fewest bears since January 2018. While complacency abounds, investor risk appetite remains shy of where it was in March, even with the uptick in speculative activity over the last two weeks. Liquidity conditions have been tightening of late and momentum trends are diverging from price trends. While the apple cart has not been upset, the load is perched precariously and one small stumble could send fruit flying in all directions. It’s not a low-risk load on which to ride.
Sentiment Report Chart of the Week: Shifting Leadership?
From the desk of Steven Strazza @Sstrazza and Grant Hawkridge@granthawkridge
Check out our latest Mystery Chart!
What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.
This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.
It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!
The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.
While you can try to guess the chart, the point is to make a decision…
So, let us know what it is… Buy, Sell, or Do Nothing?
