From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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. What remains is a list of stocks that large financial institutions are putting big money behind... and they're doing so for one reason only: Because they think the stock is about to move in their direction and make them a pretty penny.

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've already had some great trades come out of this Smallcap-focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."

To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.

From the desk of Steven Strazza @Sstrazza

In last week's Mystery Post, we discussed this chart and posed the question as to whether or not it was about to finally break out above those prior highs.

With price coiling in a bullish flag-like continuation pattern, yet showing waning momentum - responses we're mixed with many wanting to wait for more information.

The chart was a long-term look at the Global Auto ETF $CARZ. And as far as the impending breakout is concerned, it looks like we got our answer this week...

Here's the same weekly bar chart. Looks a bit different now, doesn't it?

From the desk of Steve Strazza @Sstrazza

We held our June Monthly Strategy Session this past Thursday 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.

Everything you see us do here is an incredibly selfish endeavor.

We build the tools that WE think are helpful. We build the scans and strategies that WE find valuable.

All the money we reinvest in people and technology are to accomplish OUR goals.

That's been our mission since day 1: Keep it selfish. Do what WE think adds value to OUR process.

And as it turns out, all of you agree with most of what we do. You ALSO think those tools and strategies are valuable and/or cool.

I've had a front row seat to this beautiful phenomenon for over a decade.

So when we're having talks internally about upcoming projects, I find myself always reverting to that:

Do WE think it's cool?

Do WE think it adds value?

Because if we do, then my bet is most of our audience will also.

And that has worked well for us over the years.

So with that theme of selfishness in mind, I personally love to flip through charts on Saturday mornings. I find that to be way more valuable than reading the newspaper, or god forbid watching television.

For me, it's not just about one indicator or one chart.

It's a weight of the evidence game.

Since March, the bet has been Messy For Longer. We've expected a choppy environment. That's what the weight-of-the-evidence and history suggested.

But now what? Are these consolidations going to resolve lower? Or Higher? Or just stay messy for even longer?

That's what makes this all so great. I don't know. And neither do you. No one does.

It's a beautiful thing.

So as I weigh the evidence to decide rollover or breakout, I come to a series of divergences that put this stock market in quite the predicament.

With S&Ps and major indexes hovering near all-time highs, we're just not seeing it from the components themselves. Here's the Russell3000, for instance, seeing fewer and fewer new highs:

So there you have it folks, here's your Crude Oil breakout.

It was bound to happen right? It kept pushing up against those former highs.

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

As May just came to a close, many spent the weekend celebrating the kick-off to the Summer season at Memorial day barbeques. We did that too. BUT... being the nerds we are, we also spent much of the weekend pouring over some fresh monthly candles now that yet another one is in the books.

In the spirit of our sacred monthly candlestick process here at Allstar Charts, in this week's column, we're going to take a step back and discuss some of the primary trends at play in Commodities Markets.

We only get this incredibly valuable information ONCE a month. That's right. Just TWELVE times a year. As such, we really cherish weeks like these. 

So, let's dive right in and talk about one of the charts that really stuck out this month: None other than the good old Thomson Reuters $CRB Index, arguably the broadest barometer for the asset class as a whole.

With the Dow Jones Transportation Average hitting our upside targets last month, it's become a wait and see game. 

Are consolidations resolving higher, like they were before? Or are they resolving lower?

Based on the overwhelming amount of evidence, the bet we want to make as that Transports resolve lower, and join some of the other areas that have already been under pressure for months, like Tech and Small-caps.

When going through the components of this index, there were 6 names in particular that presented the best risk vs reward opportunities on the short side.

The first one Southwest Airlines. This looks like a top to me. How I learned it was to buy the smiley faces and sell the frowny faces.

There is now more than enough evidence to say with certainty that digital currencies are here to stay.

In the last few quarters, the market has spoken. The size of some of these coins is mind-blowing.

What was once peanuts, the total market cap of the asset class achieved the $2T milestone at its peak last month.

There are literally several thousands of options or individual coins/tokens to express our opinions, and the list is growing every day.

So the number of options and ease of access is only accelerating the interest and activity in the space. We don't see this changing.

The greatest trick the market ever pulled was convincing growth investors that they weren't in a bear market....

You can really see it in this week's AAII Poll, which shows the FEWEST amount of bears since January 2018.

One thing I've learned, is that when the bears run out, the market has a funny way of creating some:

Once again this month, I'm going to share info on positions that were closed in the month of May. As a reminder, our exit plans are always laid out ahead of time in each trade idea we publish. In every case, the exits mentioned below were all exited in accordance with the plan as laid out.