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.

We...

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. 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,...

A healthy rotation is underway across equity markets.

Leadership has swung toward cyclical value-oriented names over the trailing two weeks. Small-cap Energy, Materials, and Financials are outpacing the year-to-date top performers (Large-cap Tech). It’s a clear expansion in participation and a hallmark characteristic of any bull market.

But if cyclical stocks have a chance at participating over the long haul, we want to witness similar strength from corresponding commodity markets.

And we are…

Check out rebar futures posting a potential failed breakdown: 

The bounce in rebar fits with the strength in small-caps and Emerging Market equities. If industrial metals such as rebar start catching higher, procyclical commodities and their related stocks likely follow suit…

What about Dr. Copper?

Copper...

From the Desk of Ian Culley @IanCulley

Forget about Wednesday’s FOMC decision.

Yes, investors continue to react, unpacking Jerome Powell’s words while looking ahead to next month’s meeting. It’s a never-ending cycle proffered by unrelenting data.

But it’s this constant flux that makes the market the most engaging puzzle in the world (aside from life, of course).

Yet one piece of the puzzle renders the chaos manageable… 

The closing price.

That’s the main reason I choose to devote the majority of my energy to price charts. The closing price is seldom revised, acting as an anchor during turbulent conditions. 

Call me old school, but price is never wrong.

With that in mind, let’s take a fresh look at a key intermarket ratio many (including me) have labeled “broken”...

I'm talking about regional banks versus REITs.

This ratio belongs to a long list of intermarket relationships that haven’t...

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.

By adding our...

From the Desk of Ian Culley @IanCulley

Markets are bracing for tomorrow’s FOMC decision – including the dollar.

That’s right – we have more indecisive action on tap. Let’s call it the knee-jerk before the knee-jerk, with a little help from today’s May CPI print. 

Interest rates, the US Dollar Index $DXY, and gold have yet to make a decisive directional move.

To be fair, most markets are trading within their respective year-to-date ranges (except the S&P 500 and Nasdaq 100, of course).

But if we turn to emerging market currencies, we don’t see any sign of hesitation…

Check out our EM Commodity Currency Index (equally weighting the Mexican peso, the Brazilian real, the Chilean peso, and the South African rand) posting new 52-week highs after violating a long-term downtrend line at the beginning of the year:

...

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended June 9, 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.

Under the Hood is a value-add for investors of all kinds, as we can express our views through a variety of different types of stocks.

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...

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

Gold can’t do all the heavy lifting.

I believe a generational rally for gold has already begun. But my structural outlook hinges on the former 2011 peak.

Gold must hold above that former high, marking the end of the previous secular bull run. 

It’s held this level so far. 

But if gold has any chance of printing new all-time highs as it has versus most major global currencies, it needs a little help from its friends…

From the Desk of Ian Culley @IanCulley

Commodities are caught in correction mode.

Copper has undercut former support. Crude oil is trading below its former cycle peak. And grain markets can’t catch a bid.

It’s not the most bullish behavior. But remember, price doesn’t travel in a straight line. 

On the bright side, most commodity contracts have stopped going down.

And the future will only become brighter for commodity and stock market bulls if buyers continue to bid up this next stock…

Check out Steel Dynamics $STLD, a $17B steel producer:

STLD has been on our radar for quite some time as it has respected key extension levels while grinding higher.

Notice the 98 level acted as resistance in early 2022. More recently, this level became support. This is the...

From the Desk of Ian Culley @IanCulley

International credit spreads are contracting.

Investors are running from imminent global collapse by reaching for emerging market bonds over risk-free US Treasuries. 

Wait, perhaps I heard it wrong. 

It could have been a US economic collapse. 

Or was it the Chinese yuan replacing the US dollar as the world’s reserve currency?

Honestly, I don't pay much attention to the doom and gloom. (But I do find it amusing.)  

I’m not the only one ignoring the bad vibes.

The markets are also disregarding the fear mongers…

Check out the Emerging Bond ETF (EMB) versus the US Treasuries ETF (IEF) ratio overlaid with the S&P 500 ETF (SPY):

These two lines follow a similar path – a path currently driven by burgeoning risk appetite.

Investors prefer riskier EM bonds over their safer US counterparts as the EMB/IEF ratio prints fresh highs. So it isn’t surprising those risk-on attitudes are spilling over into the S&P 500 $SPY.

It’s...

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 during their...