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.

The bears have found a new home: gold mining stocks.

Silver’s breakdown earlier this month raised the caution flag for the entire precious metals space. 

Less than two weeks later, gold futures and mining stocks are falling under the wrath of increased selling pressure. Precious metals bears are winning the battle as support levels fall to the wayside. 

Meanwhile, the bulls are reluctant to leave without a fight…

From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

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. You can 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:

From the Desk of Ian Culley @IanCulley

Watch out for cotton!

Back in February, I highlighted a bullish setup in cotton futures. 

Buyers were hammering a key retracement level from below. The way I learned it, "The more times a level is tested, the higher the likelihood it breaks."

Three months later…

The July contract is knocking on the door – again!

How polite.

Check out July cotton nearing the January 2022 closing high of 88.34:

That’s my level.

From the Desk of Ian Culley @IanCulley

Tech stocks don’t care about the manufactured debt limit crisis. Nor are they bothered by the increasing probability of a rate hike next month.

Growth stocks seem concerned with only one thing – printing fresh highs.

The Tech sector ETF $XLK posted new 52-week highs yesterday. And the Communications ETF $XLC rallied within reach after taking out its Aug. ‘22 pivot highs. 

So where does that leave bonds and other long-duration assets? 

If these base breakouts across growth sectors hold, I imagine bonds have some serious catching up to do…

Why?

Growth stocks tend to trend with bonds since they’re both long-duration assets. Changes in interest rates directly impact US Treasuries and affect tech stocks more than other equities.

Check out the tight relationship between the Long-Term Treasury ETF $TLT and the Technology sector $XLK:

From the Desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as "a market of stocks."

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.

Now, we're also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

From the Desk of Ian Culley @IanCulley

Dollar up… 

Everything else? 

Down.

Last Friday’s action sent flashbacks of 2022 across my screen.

It was all King Dollar last week as risk assets and bonds sold off in tandem.

But before we all get carried away talking about the next leg higher for the dollar, let’s zoom out to get a read on where the DXY truly stands…

In the middle of a short-term range.

The US Dollar Index $DXY finished last Friday, posting its best week since peaking in late September 2022.

But it’s been stuck between 105 and 101 since December:

The DXY might have gained 1.5% last week, but it’s stuck below a key retracement level. It’s a range-bound mess like much of the market despite the recent bout of strength. 

Sideways is the trend.

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended May 12, 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.

The caution flag is flying.

Broad selling pressure is hitting the markets as gold, silver, and mining stocks slide.

Will the Fed hike? Will it cut? Or will it finally pause?

I have no idea, and nor does anyone else.

But gold’s crazy cousin has some definitive answers for precious metals bulls…

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.

Here’s this week’s list:

From the desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That's why we're turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money." Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

Bonds are catching a bid as a risk-off tone plays across the market. 

Aside from intraday knee-jerks in price, not much has changed. Rates and the US dollar remain range-bound. US Treasuries have yet to provide a definitive buy signal.

And the S&P 500 continues to contend with overhead supply at the 4,200 level.

It’s a chop fest.

But one data point has changed in recent sessions – the probability of a rate cut or a rate hike next month based on the fed funds futures…

Check out last Thursday’s probabilities after the FOMC raised the overnight rate by 25 basis points:

The futures market was pricing an 8.9% chance of a rate cut in June with a 91.1% chance of a pause in the hiking cycle.