I can't help but notice the similarities between the Bitcoin Crash we just saw and what happened to stocks in 1987.

You guys following me for a while know I'm not big on analogs. Every market environment is different.

But history does help us put together a roadmap. We're all humans in this endeavor after all. And that certainly doesn't change, even if we are talking about Crypto and not stocks, 2021 and not 1987.

For you guys who are new to markets I encourage you to study the past. Learn about prior cycles and what happened.

These are great lessons. I promise you.

The US Stock market was booming in the 1980s, after doing nothing for decades since topping out in the mid-1960s.

Stocks were rolling. They had meme stocks and reddit back then too. They were just called other things like Junk Bonds and Corporate Raiders.

Those were some good times.

Then came Black Monday in October of 1987.

The S&P500 fell 20.4% in a single day.

From the desk of Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 100 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 which you can check out here.

The Hall of Famers is simple.

We take our list of 100 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 Steven Strazza @Sstrazza

It's been about a month since small- and mid-caps resolved to the upside and made fresh highs.

As we all are aware, these were simply massive head-fakes. We're right back to where we started--stuck in the middle of the same range we've been in all year.

There was also plenty of evidence from our intermarket relationships and ratios to support these moves. Discretionary-versus-staples ratios broke to fresh highs. Copper versus gold. Stocks versus bonds. Inflation expectations. They all made new highs recently. But, just like most stocks on an absolute basis, many of these breakouts have since failed.

Of all these developments, it's hard to argue that any is more important than the stocks-versus-bonds ratio retracing back beneath its Q1 highs. With long rates making new lows and stocks selling off, let's talk about how we are approaching both of these asset classes right now.

Here's the S&P 500 $SPY relative to long-term Treasury bonds $TLT, zoomed out to the early 2000s.

If the world was coming to an end, would Homebuilders be breaking out of 6-month bases to new all-time highs?

I would argue no.

The Homies are one of those groups we look to for leadership in strong markets, not in weak ones.

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Breakouts and breadth expansion kicked off the month of November. 

But the market had other ideas... 

Instead of fresh legs higher, investors were dealt a handful of downside reversals and failed moves. Last week, we went from discussing breakouts and new highs for stocks... to throwbacks and retests of old ranges. This all happened in the matter of a few trading sessions.

A lot has changed in a short period. In times like these, it’s important to take a good look under the hood to see what market internals are suggesting.

As we reviewed our breadth chartbook today, we asked ourselves the following questions: 

Are we seeing a notable expansion in new lows? Is it enough that we should be worried?

Let’s take a look beneath the surface and see if we can find some answers!

First, let’s check in on the 21-day and 63-day lows for the S&P 500:

From the desk of Steve Strazza @Sstrazza 

We held our December Monthly Strategy Session last night. Premium Members can click here to review the recording and the accompanying slides.

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 a valuable exercise, 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.

We have a new Options trade up this week.

We're selling an $IWM December 31 (weekly) Iron Condor. We’ll be short the 210 puts and 235 calls, while protecting the position $5 away in both direction with long 205 puts and 240 calls. This entire spread can be put on for about a $1.70 credit.

Check out our short video with the thought process behind these trades:

This is the video recording of our December 1, 2021 Monthly Charts Live Strategy Session

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 Steve Strazza @Sstrazza

Plenty of stocks continue to show relative strength through the recent volatility. We still want to be buying these leaders.

And plenty of stocks continue to underperform, having already violated their year-to-date ranges to the downside. Those are the names we want to be looking at to short.

But most stocks are simply in "no-man's land" right now.

Some were rejected at their year-to-date highs. Others broke out and quickly failed. It doesn't matter how they got there. What matters is they're now "back in the box" and facing the very same overhead supply levels they've faced for much of 2021.

It looked as if markets were making progress earlier this month. But it turns out most of these new highs were -- dare I say --transitory?

Let's take a look at financials, using the group as a case study for how we want to approach all the range-bound patterns we see out there.

We debuted a new scan recently- The Outperformers.

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.