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.
Welcome back to Under the Hood, where we'll cover all the action for the week ended April 28, 2023. This report is published bi-weekly and rotated with The Minor Leaguers.
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.
From the desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let’s dive in and take a look at some of the most important stocks from around the world.
I was in New York City most of the week for the annual CMT Symposium.
On Wednesday afternoon I dropped by Fox Business to chat with Liz Claman about the ongoing bull market that is now on Month #11.
My point in the hit was that a lot of the focus seems to be on these tiny little irrelevant banks disappearing, instead of actual important companies with real market caps.
Just to put things in perspective, First Republic is worth less than a billion dollars. So that and zero may as well be the same thing.
Meanwhile, Microsoft Wednesday was up over $140 Billion in market cap overnight.
So if that's the case, why should anyone care about First Republic?
As long as the market doesn't care, I definitely don't.
As many of you know, something we've been working on internally is using 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.
This week will be an opportunity for me to practice the art of giving up control. It will also be an incredible opportunity to practice acceptance and patience.
The market is open and I’m typing this piece while traveling 30,000 feet above Midwestern corn fields en route to New York City.
Thankfully, I’ve got internet access on the plane and can keep tabs on the market and my positions. But it’s not perfect. Anyone who’s tried to work with airplane WiFi knows it isn’t always as reliable as we’d like it to be.
I’m headed to NYC to reconnect with the All Star Charts team, celebrate our friend Brian Shannon in honor of his recent book release, and attend the Chartered Market Technician’s 50th Annual Symposium.
All week, I’ll be gathering with some of the smartest market minds, driven traders, and portfolio managers around. I’m hoping to sponge as much great content and smart ideas as I can possibly cram into my cranium.
The challenge for me will be in managing my open positions — particularly my highly active index options trading.
These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.
This month’s Video Conference Call will be held on Monday May 1st @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.
"Rates, the US dollar, crude oil, and the S&P 500... repeat!"
These charts swirl atop every investor’s mind as markets await the upcoming rate hike decision.
Meanwhile, it’s messy!
The S&P 500 challenges the upper bounds of a multi-month range. The US dollar and interest rates chop sideways. And crude oil remains resilient despite increased selling pressure.
But not all markets are trapped in a trading range right now. In fact, there’s one forex cross breaking down, suggesting lower yields and cheaper crude oil…
It's the nokkie-stocky, the Norwegian krone and the Swedish krone!
Check out the triple-pane chart of the US 1o-year yield, crude oil futures, and the NOK/SEK cross:
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, a company must have a market cap between $1 and $4B.
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.
