The market is speaking. It wants higher prices. The year-end, seasonality-driven rally may be taking hold. Or it may be something else? It doesn't really matter. We only follow price, and right now prices in certain stocks are pointing us to start taking some directional bets.
Today's trade is in an industry-disrupting name that has already had an impressive move over the past week that we feel is only the beginning of a much larger drive.
Check out this chart of everyone's favorite ride-hailing service Uber Technologies $UBER:
The Nasdaq100 index just went out at the highest levels in history relative to the much broader Russell3000 Index.
Technology represents about 50% of the Nasdaq100, with Apple's weighting coming in at 11% of the index and Microsoft currently at just over 10%.
But the Nasdaq100 is a good representation of these mega-cap names, because Amazon, Google, Meta and Tesla all carry huge weightings. Remember, none of these stocks are in the Tech Index.
So the Nasdaq100 broadens it out to what most people consider "Tech".
Here's the QQQ hitting new all-time highs relative to Russell3000:
Sometimes investors forget that there are 500+ stocks in the S&P500, 30 stocks in the DJ Industrial Avg and approximately 3000 stocks in the Russell3000.
This is all free and public information.
But still, investors forget, especially during times when it's most important to remember.
That's just human nature.
We take things for granted until we need them the most.
This quarter has been a prime example.
You see, while the S&P500 and other indexes were making new lows last month, the list of stocks making new lows had already peaked in early October.
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
This is one of our favorite bottom-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'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.
Crude oil is relinquishing its leadership role. Gold and silver are catching a bid. And copper is digging in at former support.
But it’s not only base and precious metals bouncing off critical levels…
Check out our Equal-weight Commodity Index refusing to roll over:
Our commodity index, comprised of an equally weighted basket of 33 commodities, is finding support at a shelf of former highs. This is the principle of polarity at its finest – former resistance turning into support.
We held our November Monthly Strategy Session Wednesday 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.
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. Click here to check it out.
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.
