In yesterday's note, we pointed to the growing leverage in derivative markets, explaining that we anticipate it unwinding in coming weeks.

Since we published it, we've seen an aggressive "sell" wall placed on FTX, the world's third-largest derivatives exchange by open value.

This caused Bitcoin to sell off and created a clear zone of supply.

On the other hand, Bitfinex, one of the most prominent spot exchanges, has a monster "buy" wall placed just under current market prices.

FTX and Bitfinex are experiencing significant order book activity, and there are now monster walls placed on either side of market prices.

Additionally, we've seen yet another uptick in open interest to all-time highs in a context where price stability is at a local peak and Deribit implied volatility is progressing down to its lowest value since April....

This is the video recording of our January 3rd Monthly Charts Live Strategy Session

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We’ve already had some great trades come out of this small-cap-focused column since we launched it in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

We recently decided to expand our universe to include some mid-caps…

For about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but it’s time we branch out a bit and allow some new stocks to find their way onto our list.

The way we’re doing this is simple…

To make the cut for our new Minor Leaguers list, a company must have a market cap between $1 and $4B. And it doesn’t have to be a Russell component–it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe...

From the desk of Steve Strazza @sstrazza

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.

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...

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts 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.

Continuation Patterns And Primary Uptrends

As we enter the new year, let’s take a step back and discuss where we’ve come from. The following chart is an excellent illustration of the price action for risk assets in 2021. As you can see, both stocks and commodities went through a corrective phase for much of the year and remain stuck in their ranges as we head into 2022. Markets can't go sideways forever, so we expect resolutions sooner rather than later. And because the vast majority of these consolidations are simply continuation patterns within the context of primary uptrends, we’re expecting upside resolutions. The question simply remains “when?”

From the desk of Steve Strazza @Sstrazza

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. This information then helps us put near-term developments into the big picture context and provides insights regarding 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.

Macro Universe:

• Our macro universe was green this week as 72% of our list closed higher with a median return of 0.52%.
• This week, Lumber $LB was the winner, closing with a 9.07% gain.
• The biggest loser was the Volatility index $VIX, with a weekly loss of -4.12%.
• There was a 2% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 55%.
• 57% of our sector list made fresh 4-week highs, 21% made...

From the desk of Willie Delwiche.

Key Takeaway: Large-caps take the 2021 crown as mid-caps & small-caps struggle to get back in gear. US strength not being echoed among global equities. Tactical risk management model gives benefit of the doubt to bulls.

• Entering 2022, Real Estate, Technology, Health Care and Consumer Staples hold down the top spots in our S&P 500 sector relative strength rankings.
• Our industry group-based heat map shows deteriorating conditions across Energy and Financials and improving conditions in Staples and Utilities. Leadership from defensive groups is not usually consistent with risk-on behavior.

The All Star Charts team put a report out about the Metals sector end of last week, highlighting undercurrents investors should be keeping an eye on. Not everything is sending "all-clear" signals yet. But there is one particular name that definitely has my attention and is offering a good reward-to-risk opportunity to get involved.

I'll spare you any further preamble and we'll get right into the money quote that has me interested:

Another week, another IT trade setup that we're looking at. While there is a pickup in the market sentiment, the ideas with most conviction are coming through from IT.

Let's take a look at what we have today!

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

It's a new year!

Are you ready to crush it?

I am.

But it seems investors are coming in skeptical of what 2022 might bring.

As we've already mentioned, the data points to investors being much much more bearish coming into 2022 than they were going into 2021 or 2020, where they were incredibly bullish and optimistic going into those years.

But as we know all too well, stocks peaked in February of both those years, on an absolute basis in 2020 before the COVID crash, and internally in 2021 when many stocks started their declines.

This has been a common theme so far in my year-end analysis: using the words "New Highs" much more than usual.

Premium Members can download our Monthly Chartbook here.

Take a look at a broad measure of European stocks coming out of a 20-year base and now making new all-time highs.