From the desk of Steve Strazza @Sstrazza

We held our June Monthly Strategy Session last Thursday night. Premium Members can click here to access the recording and the chartbook.

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.

A lot of the worst investors I know and people who I regularly like to bet against are preparing for a recession.

Are you?

I've always been in the camp that recessions are the economic implications of changes in asset prices.

And that's because, well, it's just fact. Price leads. The "economy" follows....

So for me, I'd rather just focus on price then. Why would I waste time on the lagging data when we can spend our time on the forward looking data?

And so here we are.

What's it going to take for stock prices (outside of energy) to stop falling?

I think it's more of what we've seen over the past few weeks: A weaker Dollar.

This is the video recording of our June 2nd Monthly Charts Live Strategy Session

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

The US dollar is on the ropes as global currencies bounce back.

After failing to hold its breakout earlier in the month, the USD looks vulnerable against a growing number of currencies.

The pound and euro are catching higher. The Swiss franc is rebounding off its recent lows. And the commodity-centric Australian and Canadian dollars remain resilient.

We can add the Mexican peso to this list, as the USD/MXN cross broke down to fresh 52-week lows yesterday. This breakdown supports the near-term bearish argument for the dollar.

And it also offers a great trade setup. 

Let’s take a look.

Here’s a chart of the USD/MXN pair:

While the Mexican peso has chopped sideways since late 2020, we believe the trend is shifting to the downside.

Last week, prices punctured the range lows as the USD/MXN hit...

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

The US dollar is front and center as risk assets hang in the balance.

Earlier in the month, we placed the Australian and Canadian dollars on breakdown alert as they completed major topping patterns.

US dollar strength was expanding at the time, and the AUD and CAD were the last dominos to fall.

Or so it seemed.

What started as strong downside resolutions for these top commodity currencies quickly turned into potential failed breakdowns.

Now that the most resilient currencies are snapping back against King Dollar, it's compromising the broad US dollar rally and could usher in a more favorable environment for risk assets. 

Let’s discuss what it means for stocks and commodities if these failed breakdowns resolve higher.

Here’s a chart highlighting the recent action in the Canadian dollar and Australian dollar futures:

Two weeks ago, these top commodity...

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

This is the video recording of the May 2022 Mid-month Conference Call.

We discussed:

• The average stock down 30-45% depending on the exchange
• Most consecutive weeks of more new lows than new highs since 2008
• How will US Dollar near former highs impact stocks
• Energy Stocks & Commodities at a Critical Juncture
• Major Bond Futures Contracts at Key Support: 2s, 5, 10s & 30s
• Consumer Discretionary the worst performing sector
• New Short Ideas in Growth
• Stocks Showing Relative Strength bucking the trend
• International weakness - stocks are below overhead supply
• Commercial Hedgers continue to buy Energy Futures
• Precious metals underperforming stocks and commodities
• Chilean Lithium continues to shine
• Agriculture stocks and commodities still trending higher
• A look into some recent insider transactions
• Crypto at key support levels, similar to the bond market

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

Copper is challenging the lower bounds of its range.

The AUD/JPY is attempting to reclaim former support.

And the S&P 500 is digging in at the AVWAP from its COVID lows.

These are some of the most important charts and levels in the market right now. 

But there’s one chart that tops them all… 

In our view, the US Dollar Index $DXY is the key to this market. 

It’s currently struggling to resolve higher from a multi-year base after reaching its highest level since 2002.

The breakout could stick and lead to a sustained uptrend. Or, it might fail. Either way, the outcome will have wide-ranging impacts on risk assets.

If the breakout from this multi-year double bottom is a valid one and the dollar continues to trend higher, we’ll continue to see downside pressure for the majority of risk assets.

The...

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

Despite the rising US Dollar Index, strength among commodity-centric currencies has been a key theme for much of this year. 

Today, that’s no longer the case.

The rally in the USD is accelerating, as dollar strength broadens to even the most resilient currencies. 

Two of the top commodity currencies – the Australian and Canadian dollars – are undercutting the lower bounds of their current ranges and making fresh 52-week lows.

These breakdowns mean the path of least resistance is now lower. If these are valid resolutions, we’re looking at increased headwinds for risk assets.

Let’s look at a couple charts of the AUD and the CAD, highlight the levels we’re watching, and discuss what continued weakness in these major currencies means for stocks and commodities.

First up is the Australian dollar-US dollar cross:

...

As we progress into Q1 of Fiscal Year 2022-2023, this playbook outlines our thoughts on every asset class and our plan to profit.

This playbook will cover our macro view, touching on Equities, Commodities, Currencies, and Rates, as well as outline our views on the major nifty indices and the sector/thematic indices.

We also cover individual stocks we want to be buying to take advantage of the themes discussed in the playbook.