What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.
This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.
It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!
The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.
While you can try to guess the chart, the point is to make a decision…
So let us know what it is… Buy, Sell, or Do Nothing?
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.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Is the US Dollar Index $DXY on the brink of completing a massive reversal pattern to the downside?
As more evidence comes into the picture, it's looking increasingly dire for the dollar. In fact, we're seeing it trend loweracross all timeframes against almost all of its peers.
And this action has only gained steam over the last week as DXY has plunged to fresh multi-month lows.
Dollar weakness has been a nice tailwind for risk assets since its peak in March of last year. Any additional downside pressure in the coming weeks, months, and even quarters would not surprise us... especially if this daunting double-top pattern breaks lower. If and when this happens, further weakness from both a tactical and structural standpoint is exactly the bet we'll be making.
At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.
Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.
The bullish picture still lies as a structural backdrop.
But now, we're seeing mixed signals as many areas have become increasingly vulnerable in recent weeks. This is all taking place as defensive assets have found a footing for the first time in over a year, while risk-on assets approach logical levels of supply.
Recent weakness has been particularly isolated in former leadership groups, like Small-Caps and Growth-heavy areas.
Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. We can then put these near-term developments into the context of the big picture and glean insights into the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Smalls Signal An End To The Growth/Value Countertrend
One of the main themes we’ve seen unfold as the market has rallied off its recovery lows from last year is the rotation into value stocks and more cyclical areas of equity markets. We’re seeing it around the world too, and it’s also responsible for driving many other relative trends like that between small and large-caps and US vs ex-US equities.
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."
Ultimately, to make the cut for our Minor Leagues list, you 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 only.
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 longer-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 5-9 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 & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.
Copper is breaking out to new all-time highs. Soybean Oil is trading at its highest levels in over a decade. These moves come as Grains, Lumber, and Base Metals have resumed their near-vertical ascent over the past couple of weeks.
But risk assets hitting our price objectives or running into logical levels of supply are key themes playing out across the market right now.
As many commodities approach key levels of potential resistance, it raises an important question…
From the desk of Steve Strazza @Sstrazza and Ian Culley @IanCulley.
We held our May Monthly Strategy Session Monday night which Premium Members can access and rewatch here.
For these calls, we really take a step back and put things in the context of their structural trends by focusing only on Monthly charts. This is easily one of our most valuable exercises.
In this post, we’ll provide a summary of the call by highlighting three of the most important charts and topics we covered along with commentary on each.
But it's easy to lose sight of the long-term trend sometimes, especially if you don't zoom out enough. This is why our process of looking at monthly candlesticks is so important. It literally forces us to take a step back and focus on the structural trends at play.
And that’s exactly what we did in this week’s Currency Report. When looking through all of our monthly charts, the big picture view of the US Dollar / Swiss Franc pair really stood out. We're going to discuss it in today's post.
Today, we're going to discuss an Industrial conglomerate and well-known household name, as well as one of the largest Natural Gas companies in the world.
Not only are these stocks in some of our favorite sectors right now, but both are currently flirting with reclaiming key former highs. They also offer clearly defined risk levels to trade against, in addition to profit profiles skewed heavily in favor of the bulls.
We'd be remiss not to share these setups with you, so let’s dive right in and look at them…