The old saying from our friend Jeff Hirsch goes, "Buy in October and Get yourself Sober".
Did you listen?
And it's not so much about literally buying blindly in October, and more about the fact that stocks tend to end their seasonal corrections around that time, before going on to rally into the end of the year.
And that's exactly what we've seen.
Here is the 4-year seasonal cycle, which of course, suggested strength in equities since mid-term elections last year. And we certainly saw it.
Then the Q3 correction came and went, again all perfectly normal.
And finally that year end strength, which of course we're seeing:
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.
During bull markets, the leading stocks tend to remain leaders longer than most investors can fathom.
That's just how markets work.
This cycle Nvidia has been a big winner. It was one of the first to break out to new all-time highs. And it's been one of the best performers, despite its massive $1.2 Trillion market cap.
That's the exact definition of a market leader. And our bet is that it continues to hold that title:
We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
We expanded our universe to include some mid-caps.
To make the cut for our Minor Leaguers list now, a company must have a market cap between $1 and $4B.
As we always like to say around here, it's a market of stocks.
When we refer to "the stock market", let's remember that there are 500, or so, stocks in the S&P500. There are 3000 stocks in the Russell3000.
It's a market of stocks.
That's how we knew the market started to improve 18 months ago, because the list of stocks making new lows peaked in June 2022.
Even in the most recent correction in Q3 this year, the new lows list peaked on October 3rd.
On the other side of that formula is the list of stocks making new highs.
The list of stocks on the NYSE making new highs is the longest its been in over 30 months.
The list of stocks making new highs keeps getting longer. The list of sectors and industry groups making new highs keeps getting longer. The list of countries around the world making new highs keeps getting longer.
It's almost as if the market is getting stronger, not weaker.
And when you zoom out, you can see that this structural bull market remains intact.
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.
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.
