From the desk of Willie Delwiche.

Key Takeaway: There are plenty of adages to remind us that evidence of optimism re-emerging as stocks rally is neither surprising nor necessarily harmful to the health of the rally. When optimism gets overly excessive and begins to retreat we need to pay more attention to the risk side of the equation. What really caught our attention this week was that the imbalance in sentiment expressed by advisory services (Investors Intelligence) and individual investors (AAII) has been resolved. In mid-September, the AAII survey showed 22% bulls and 39% bears while the II survey had 50% bulls and 22% bears. Both surveys now show bulls in the 40’s and bears in the 20’s. Our sentiment chart of the week shows that when we’ve seen this degree of agreement between these surveys in the past, stocks have tended to do pretty well.

Sentiment Report Chart of the Week:  Stocks Appreciate Survey Agreement

It happened in March of this year, it’s happening again - the II and AAII surveys are in...

Feels good to be back from vacation! And I'm glad to see the stock market fared nicely while I was gone.

Looking around, we're seeing lots of fresh setups. But with earnings calls on deck, I'll have to be patient with many of my favorite ideas to let the event pass so as not to caught offsides by a sudden move in the wrong direction.

However, one of my favorite setups just got its latest earnings release out of the way this morning and thankfully it basically amounted to a non-event. Its recent breakaway gap continues to hold above its prior 3-year resistance level. And with the binary earnings event out of the way, options premiums have been evaporating throughout the day. This sets us up for taking a longer-term position at advantageous prices.

We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.

While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.

Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Crude oil has stolen the show, as it’s up more than 28% from its August lows.

What started as a questionable breakout has turned into a full-fledged rally -- and the broader market seems to agree.

Copper retested its all-time highs last week, interest rates are on the rise across the curve, and cyclical stocks have become leaders.

All of these events fit neatly in an environment where crude oil prices continue higher.

But what does the currency market have to say about the recent strength from black gold?

Let’s look at our Petrocurrency Index for clues, along with one forex pair that's showing strength against the US dollar.

First, we have our Petrocurrency Index overlaid with crude oil futures:

...

From the desk of Willie Delwiche.

Key Takeaways:

• China weakness has meant moving away from EEM for Emerging Market Exposure
• New highs from Taiwan could point to improving trends for China and EEM
• Canada benefitting from exposure to Energy & Financials

Emerging markets have been dealing with the opposite problem that we have discussed in the US. In the US, mega-cap strength has supported the indexes as conditions beneath the surface struggled. In Emerging Markets, mega-cap weakness (China accounts for nearly 22% of EEM) has weighed on the indexes as conditions beneath the surface improved. The goal of this piece is to help discuss how we will know if and when that condition changes. 

Given the struggle at the top of the index, we have been utilizing India, Russia, and Saudi Arabia (which together account for 19% of EEM) for Emerging Market exposure. All three of these (as well as FM, Frontier Markets) have made frequent appearances on our new high lists.

...

For the most part, traditional markets have been a fat mess for the better part of this year.

That's why crypto has caught our attention so much in recent months: It's stood out as a beacon of alpha.

Whether or not you've been invested in crypto, chances are you've probably heard all the chatter about Solana - and for good reason. It gained a whopping 700% from its July lows in just under two months, making it one of our best trades of the year.

But, when you dive down the cap scale, there are so many opportunities shaping out just like how Solana was a few months ago.

Harmony is one of them:

We've been long Harmony on this breakout above 20 cents, and so far it's treated us very well, with prices are running up against our first upside target of 33 cents.

It seems to have a great fundamental use case, bridging together a variety of smart contract platforms and essentially making...

The last couple of weeks have been quite a ride in the market.

If you've been following actively, then you probably saw the selling pressure come through in several sectors. As sectors rotate within the existing bull market, strengths and weaknesses will keep shifting hands.

Today we're here to take a look at the weak areas of the market and the levels they'd have to move past, to get out of that weakness.

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 reason only: because they think the stock is about to move in their direction and make them a pretty penny...

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 began rotating it with our flagship bottom-up scan “Under The Hood” earlier this year.

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 we think 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. 

The...

From the desk of Willie Delwiche.

Key Takeaway: Mid-caps lead the way as new highs lists expand. Breadth heading in a positive direction but still has work to do. Market rewarding stocks that beat earnings expectations, punishing those that miss.  

• The Energy and Financials sectors continue to be areas of strength on both a relative and absolute basis. They are the top ranked sectors in our relative strength work and finished last week at news highs. 
• Real Estate has rebounded in relative strength and is in the third spot overall. At the small-cap and mid-cap level, Real Estate finished at new highs last week. 
• Consumer Staples, Utilities, and Health Care remain the weakest sectors. 

All-time highs can be messy, and many times, the breakout comes after the shakeout.

So will it be like this?

Considering the accumulation taking place by long-term spot investors on-chain, it's certainly looking that way.

Yesterday we saw a notable outflow out of exchanges as investors continue to scoop coins off exchanges and into cold storage to HODL.

Not bearish.

So if and when Bitcoin resolves higher back above 65k, we'll be positioned aggressively long both Bitcoin and in quality alts.

We're talking Ethereum, Solana, Harmony, Avalanche, FTX, Algorand, and Elrond, among a few others.

There's likely to be a ton of alpha in those names in the...

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.

Looking For Confirmation

Many markets and major indexes have pressed back to their year-to-date highs in recent weeks. How price reacts at these natural levels of overhead supply will be the next key piece of information we have. We’ve already seen a handful of leadership groups like Financials and Energy reclaim these resistance zones. Meanwhile, many major indexes like the S&P rallied back to their highs last week and paused. One thing worth noting is that momentum has been waning and making lower highs despite the higher highs from price since April. An overbought RSI-14 reading would go a long way in confirming new highs at the index level.