From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended January 5, 2024. This report is published bi-weekly, in rotation 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.

Click here for a behind-the-scenes look at our process.

Whether we’re measuring increasing interest based on large institutional purchases, unusual...

From the Desk of Ian Culley @IanCulley

A risk-off tone is blanketing the precious metal space as a key data point suggests more pain ahead…

Silver is underperforming gold.

From the Desk of Steve Strazza @Sstrazza

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.

Here's this week's list:

...

From the Desk of Ian Culley @IanCulley

What goes up must come down.

It’s an old commodity market maxim that never fails to deliver. The cattle, sugar, and OJ markets embodied this truth last year. 

But as the calendar flips to 2024, it’s time to track those markets that failed to launch in 2023.

Here are three of my favorites…

Coffee

Unlike other softs such as cocoa and sugar, coffee failed to produce monster gains last year. 

But it’s now attempting to carve out a multi-year double bottom:

Notice the resistance level at approximately 197 coincides with a key retracement level and a shelf of former lows. That’s our breakout level.

Also, note that the 168 level proved an excellent area to define our risk and get long well before our current line in the sand. A similar early...

From the Desk of Ian Culley @IanCulley

US treasuries finished 2023 with a bang, hitting our initial targets before Christmas.

But the long-bond trade is losing its luster.

Resistance is now coming into play as the bond market catches its breath…

Check out the US Treasury Bond ETF $TLT with a 200-day simple moving average:

I’m not a big fan of moving averages. I don’t like how they distract from price and create extra noise on the charts.

Regardless, many market participants track the long-term moving average. Bond bulls are shouting their battle cries as TLT peaks its head back above the 200-day mark.  

So, is it time to get long bonds?

No!   

The 200-day moving average is still sloping downward when we take a step back with a weekly chart:

US T-bonds remain in a structural downtrend. Plus,...

From the Desk of Steve Strazza @Sstrazza

Welcome to The 2 to 100 Club.

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.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point...

From the Desk of Ian Culley @IanCulley

It’s a new year with unlimited possibilities!

Even ol’ King Dollar is turning the page, embracing 2024 and everything it offers with open arms. It’s shaken off the selling pressure from 2023 and appears ready to turn over a new leaf. 

But a bigger dollar rally might need a little help from a nearby friend. 

More on this idea in a second. 

First, let’s check out the US Dollar Index $DXY chart…

The DXY is finding its footing following a brutal holiday season (dropping nearly 5 percent since November 17):

The DXY stopped catching lower right where we would expect: a shelf of former lows at approximately 101.

A period of US dollar strength would make sense as the DXY mean reverts higher, especially as it enters its most favorable month of the year.

Dollar strength likely means...

From the Desk of Steve Strazza @Sstrazza

Welcome to The Minor Leaguers.

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.

And it doesn't have to be a Russell component — it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to new highs in order to...

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 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...

From the Desk of Ian Culley @IanCulley

The first day of trading is full of uncertainty and excitement. 

Aren’t they all!

Yet the new year brings one promise: events that have yet to come.

As corny as it sounds, it’s true.

Sure, precious metal bulls see new all-time highs for gold on the horizon.

I’m right there with them.

But let’s not get ahead of ourselves on day one.

Instead, let’s start the year with a long-term chart of gold…

From the Desk of Ian Culley @IanCulley

I’m not concerned with last year’s winners heading into 2024.

Winners have a miraculous way of taking care of themselves (i.e. cattle, sugar, cocoa.) 

Instead, my focus centers on those markets that failed to launch. Markets like this…

No, I’m not talking about Gold. But it certainly fits the bill.

I’m referring to wheat.

Wheat never produced an explosive rally this year – at least nothing like we saw in 2022. But that could all change in the coming six months.

Check out Chicago wheat futures carving out a potential double-bottom pattern:

Wheat futures are taking the shape of a classic Adam and Eve formation – a sharp sell-off followed by a longer accumulation period.

In addition, the...

From the Desk of Steve Strazza @Sstrazza

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.

Here’s this week’s list:

*Click table to enlarge view

We filter out any laggards that are down -5% or more relative to the S&P 500 over the trailing month.

Then, we sort the remaining names by their proximity to new 52-week highs.

This leaves...