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.
What we do here is take a chart that's captured our attention and remove the x/y-axes as well as any other other labels that'd help identify it. This chart can be any security of any asset of any timeframe - on absolute or relative basis.
Maybe it's a ratio, a custom index, or maybe 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 it 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?
Welcomeback to our “latest Under The Hood” column for the week ending February 19, 2021. As a reminder, this column will be published bi-weekly moving forward, and rotated on-and-off with our new Minor Leaguers column.
In this column, we 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.
Whether we’re measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers… there is a lot of overlap.
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.
Every major asset class on Earth continues to illustrate risk-taking behavior on the part of market participants.
Yields, Oil, Equities, Base Metals, the Australian Dollar -- there's an overwhelming amount of new highs in offensive areas of the market right now. The weight of the evidence continues to suggest that we want to bebuyers, not sellers, of stocks.
From the desk of Steve Strazza @sstrazza and Ian Culley @ianculley
We just revised and updated our Commodities chartbook and there probably couldn't have been a better time as we believe we've just entered the early innings of a new Commodities Supercycle.
As we reviewed each passing chart our bullish thesis on commodities was reinforced as the same overarching theme became clearer and clearer... Everything seems to be trending higher!
With a slew of massive bases, bullish breakouts, and major trend reversals, this once left-for-dead asset class is now demanding investors' attention.
Are Energy and Financial stocks about to lead the market?
Cyclical groups are catching all the right tailwinds in this environment.
Crude Oil and Yields are pressing to new 52-week highs as investors continue to favor more economically-sensitive stocks and commodities in general. This is a bullish development and supports higher prices for some of the most beaten-down risk assets... even Financials and Energy.
From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts
Are we finally entering the long-awaited alt-season?
We're seeing incredibly healthy rotation within the Cryptocurrency space, which we can only interpret as support for higher prices for this group of digital assets moving forward.
Here's a post in October where JC outlined that the path of least resistance was higher in BTC, and another in December where we outlined a target, which was hit in a matter of days. Our current target for the Crypto leader is 70,000.
The price action is clear: Crypto continues to benefit from a well-established uptrend.
Our main focus today is the broadening participation of many Altcoins (lingo for any Cryptocurrency not named Bitcoin).
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.
We continue to harp on the risk-on themes that support our bullish macro thesis.
If Bitcoin's run to $50,000 or the latest YOLO stocks aren't too distracting right now, you might have noticed Crude Oil just registered new 52-week highs for the first time since fall 2018.
Or maybe you're ahead of the curve and caught our post about the Energy Sector experiencing what looks like a bullish initiation thrust just a few weeks ago.
Or perhaps you saw Financials just closed the past week at fresh all-time highs... finally breaking out after almost 15-years of no progress!
On top of all this action, the US 10-Year Yield is also pressing on its highest level in almost a year.
It's clear that more cyclical stocks and economically sensitive Commodities are taking on leadership roles. We're in quite the risk-on environment.
Considering the evidence we just listed, it's finally time to address the elephant in the room...
What we do here is take a chart that's captured our attention and remove the x/y-axes as well as any other other labels that'd help identify it. This chart can be any security of any asset of any timeframe - on absolute or relative basis.
Maybe it's a ratio, a custom index, or maybe 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 it 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?
In a further effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."
We write a post every other week where we outline some of our favorite setups from the watchlist.
We've already had some great trades from this universe and couldn't be happier about the early feedback.
Moving forward, we'll be rotating this column with "Under The Hood" each week.
In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.
Then, we simply sort the stocks by their percentage from new highs. Easy done.