We've already had some great trades come out of this small cap-focused column since we launched it late last year and started 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. There are also price and liquidity filters. Then, we simply sort by proximity to new highs in order to focus on the best players.
The Nifty Metals Index is now trading at new all-time highs. At a time like this, it becomes crucial to identify the constituents that are displaying strength.
Let's take a look at some of the names in the Metal Index that are at interesting levels.
After a pause of two months, the Metals Index has broken out above its prior resistance and looks good for a dash ahead! New all-time highs come at the back of participation from the index constituents.
So which names are we looking at in the weeks and months ahead?
First up, is Hindalco.
Hindalco featured in our Trade Ideas pretty often in the first quarter. After a brief pause, the stock looks ready to rally with the break out above the level of 407. The indicator has continuously displayed strength and has been hovering around the bullish regime.
With the move above 407, the stock is trading at an all-time high!
We are bullish above the level of 407, with a target near 606.
A major theme we've been hitting on in recent months is that we've reverted to an equity market landscape dominated by US Large-Cap Growth stocks.
So we know that's where the strength has been. But up until March-May of this year, these relative trends had actually been favoring Small-Caps and Value, and even other parts of the world over the US.
So was this just a counter-trend rally, or the beginning of a sustainable rotation? The real answer is it depends where you look and how you look at it.
But we are definitely seeing some developments that suggest there could be a rotation back in favor of value-oriented and cyclical stocks in the near future.
This becomes particularly clear when we look at the relative trends of some of these groups vs the S&P. And if we see these industry groups break out on an absolute basis - which many of them already are - this could be the extra juice needed for a true relative trend reversal that would put value back in the driver seat.
Initial Public Offerings are exactly that, the initial offering of shares to the investing public. That's the beginning of price history.
This is how it used to be in the old days anyway. Today, we regularly see companies going public so their investors can take profits on their early stage bets. There have usually been several rounds of money raising along the way.
The liquidity is to pay investors, and not necessarily just to raise cash to grow the company.
And that bothers some people. But not me. I don't really care.
I'm only here to try to make a few bucks off the whole thing.
This is a new development that's commanding our attention right now, mainly because these are the weakest conditions we’ve seen many of our breadth measures since last year.
We debuted a new scan recently which goes by the name- All Star Momentum.
All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.
While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.
Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.
We're going to flip the script a bit this week with our RPP Report. We typically don't publish a report during week's where we have a monthly conference call as JC covers our positioning and summarizes our key themes and views there.
But we didn't do one last week either because we had just published our Q3 Playbook which laid out our current position in a painfully detailed manner (it was 250 pages!).
In today's post, we're simply going to recap our "Key Themes For The Current Quarter" and update clients on some major developments that have taken place in the past few weeks.
We've got some important things to cover so let's get right to it!
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.
Welcomeback to our latest "Under The Hood" column where we'll cover all the action for the week ended July 23, 2021. This report is published bi-weekly and rotated on-and-off with our "Minor Leaguers" column.
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.
