While the market remains a mixed bag and participation is lacking, we're still seeing evidence of risk appetite.
How do we know?
The stocks that investors are betting against the most are making big moves... to the upside.
And we know just what to do in these environments.
We find the most heavily shorted stocks in our freshly squeezed universe. We wait for momentum to come into these names, and then we ride them higher with the squeeze.
We got new short data recently, so let's talk about how we're playing it.
Our scan is quite simple. It is designed to identify stocks with the most aggressive short positions. When a stock is shorted, it means incremental buyers are waiting in the wings to close out their bearish bets.
We love this, as new buyers are the one true catalyst for higher prices.
When shorts are proven wrong, they become buyers of the stock. In many cases, this happens as momentum flows into these names and fuels massive short-covering rallies.
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.
We love our bottoms-up scans here at All Star Charts. We tend to get really creative when making new universes as we want to be sure they will deliver us the best opportunities the market has to offer.
However, when it comes to this one, it couldn’t be any simpler!
With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US stocks.
Welcome to The Junior Hall of Famers.
This scan is composed of the next 150 largest stocks by market cap, those that come after the top 150 and are thus covered by the Hall of Famers universe. Many of these names will someday graduate and join our original Hall Of Famers list. The idea here is to catch these big trends as early on as possible.
There is no need to overcomplicate things. Market cap is a quality filter at the end of the day. It only grows if price is rising. That’s good enough for us.
Have you heard about the breakout in America's online marketplace?
Amazon is up 5% this week as it follows other mega-cap growth stocks to new record highs. Everyone is talking about it.
But there's more to this story.
Online retail is a burgeoning industry, offering investment opportunities in a variety of companies around the world.
These growth stocks provide some of the highest beta vehicles as they are direct plays on the consumer economy.
And Amazon doesn't dominate around the globe the way they do in America. There are other regional plays that offer investors exposure to higher growth markets outside the US.
With Amazon $AMZN making a decisive resolution to fresh all-time highs today, it is an opportune time to talk about the broader online retail space.
Let's dive in!
Following the path of other Magnificent Seven names, here's Amazon.com $AMZN surging to new all-time highs:
Welcome back to Under the Hood, where we'll cover all the action for the two weeks ended June 21, 2024. This report is published bi-weekly, in rotation 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.
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.
We have another bearish divergence calling strike three on the stock market rally…
High-yield bonds $HYG versus US Treasuries $IEI.
Check out the HYG/IEI ratio (dark blue line) overlaid with the S&P 500 ETF $SPY:
We use the HY bond-to-US Treasury ratio to track credit spreads. When the dark blue line falls, credit spreads widen – a sign of dwindling liquidity and stress for the bond market (the world’s largest market).
Stocks tend to struggle as credit spreads widen.
On the flip side, when these spreads contract (or the HYG/IEI ratio catches higher) stocks rally as capital flows into risk assets. That’s why these two lines trend together.
Notice the HYG/IEI ratio and SPY bottomed last October before rallying into the spring, following a similar path to new highs.
Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.
We've also sprinkled in some of the largest ADRs from countries that did not make the market cap cut.
These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.
It's got all the big names and more–but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.
The beauty of these scans is really in their simplicity.
We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.
Based on the market environment, we can also flip the scan on its head and filter for weakness.
Let's dive in and take a look at some of the most important stocks from around the world.
Welcome to The Junior International Hall of Famers.
With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US-listed international stocks, or ADRs.
This scan is composed of the next 100 largest stocks by market cap, those that come after the top 100 and are thus covered by the International Hall of Famers universe.
Many of these names will someday graduate and join our original International Hall Of Famers list. The idea here is to catch these big trends as early on as possible.
Let’s dive right in and check out what these future big boys are up to.
This is our Junior International Hall of Famers list: