Back then, we were already leaning toward "NO." Fast forward to today, and it's more like a "NO WAY."
The reason for this is simple. In that post, we explained the line in the sand for our USD/BRICS Index was ~19.
In the few weeks since, this critical level has been violated. The market has spoken, and it's saying we're in for a lower US Dollar relative to BRIC-country currencies.
This is one of our favorite bottoms-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 the stock is about to move in their direction and make them a pretty penny.
We've already had some great trades come out of this Smallcap-focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."
To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.
In last week's Mystery Post, we discussed this chartand posed the question as to whether or not it was about to finally break out above those prior highs.
With price coiling in a bullish flag-like continuation pattern, yet showing waning momentum - responses we're mixed with many wanting to wait for more information.
The chart was a long-term look at the Global Auto ETF $CARZ. And as far as the impending breakout is concerned, it looks like we got our answer this week...
Here's the same weekly bar chart. Looks a bit different now, doesn't it?
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.
This is one of our favorite bottoms-up scans: Follow The Flow. In this note, what we do is simply create a universe of stocks that experienced the most unusual options activity - either bullish or bearish... but NOT both.
What we mean by this is that we have options experts, both internally and through our partnerships with TheTradeXchange, whereby we do all the digging through the level 2 details and do all the work upfront for our clients, in order to isolateonlythose options market splashes that represent levered and high-conviction, directional bets.
Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying 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.
We've already had some great trades come out of this Small-Cap focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."
To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
Gold has been one of the last places we have wanted to put our money over the past eight months, second only to Bonds.
Other areas of the commodities space, like Base Metals, Energy, and Ags, along with risk assets in general have experienced an explosive rally. While Precious Metals have gone nowhere. But are we starting to see signs that this could be changing?
Last week we pointed out that Lumber had reached our target and could be due for a pullback. And we’re seeing that play out.
As the market has become increasingly mixed, it's time to switch up our strategy a bit.
As we outlined in our post yesterday, for the first time in about a year, we are shorting stocks.
But this statement requires an asterisk...
We are shorting some stocks. And at the same time, we're still buying the leaders as plenty of stocks continue to show impressive strength -- particularly those with cyclical or value characteristics. That's where we're focusing for long ideas.
As for shorts, it's all growth. That is where the weakness is. We're not only seeing deterioration and relative weakness at the index level for growth stocks -- the internals are also deteriorating beneath the surface.
This is simply a tale of two markets. As growth-heavy averages like the Nasdaq roll over, the leadership areas are registering bullish breadth thrusts and carrying on higher like business as usual.
As noted in the Mystery post last week, the rounding bottom in question is a pattern we've become all too familiar with since last year.
The reason for this is simple: The chart was merely a derivative - or just another way to illustrate and visualize the overarching theme that's driving so many of our cross-asset relationships these days... The sustained rotation out of Growthand into Value.
We've written a lot about this theme since last year, and more recently have been pounding the table on a new theme that's taken the forefront for markets across the globe... We believe we're in for a trendless or rangebound period for risk assets as well as an increasingly bifurcated or mixed market.
Much of this divergence in performance among various groups can be directly attributed to this trend toward value and away from growth.
