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 greenback doesn’t know which way to go, as FX markets offer traders little in the way of breakouts.
Instead of reviewing the chopfest, playing devil’s advocate, and weighing the lack of evidence for a near-term directional bias, let’s turn to a trending market for insight into the dollar.
Spoiler alert: It’s shiny, yellow, and trading at new all-time highs.
Yes, I’m referring to Gold.
Gold and the US dollar hold a classic intermarket relationship — an overt negative correlation.
As I reviewed the charts this weekend, another pattern emerged between the two.
I decided to offset Gold ahead of the dollar by roughly two to four years. After adjusting the charts, I landed on setting Gold forward by 130 weeks (approximately two-and-a-half years).
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.
