Can you think of a more bullish combination than a bunch of angry people and indexes all over the world making new all time highs?

This is what's going on right now. And I think it's fantastic.

It's been a quiet last few days here at Allstarcharts.com as I've been meeting with the team and working on some really exciting new projects. I got together with Willie, Strazza, Peter, Danny, Jean Carlo and Matt this week, and we got a lot more accomplished than I would have imagined.

Anyway, I didn't completely fall off the grid, although I kind of tried to. Most of our conversations still revolved around the market, sentiment, breadth, rotation and the Intermarket relationships. I mean, even over dinner! We just couldn't help ourselves.

I'm seeing stocks making new all-time highs, but the questions I get from journalists is how it's possible?

How it's possible? They're in uptrends. There's more demand for stocks than there is supply of them. That's not my opinion. That's just a fact. There may not be as much demand for stocks in your household, but that's your problem. Not ours....

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending February 5, 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.

The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data...

This week we're looking at two long setups. The sectors we're looking at are Private Banks and Infrastructure.

We elaborated in the Three Charts of the Week post about the strength we're seeing in Banks and Infrastructure sectors and identified a couple of names that could do well going forward.

We retired our "Five Bull Market Barometers" in mid-July 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.

This is the video recording of the February 4th Town Hall Meeting w/ Willie Delwiche & JC Parets.

02/4/21 2PM ET

From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge

Marijuana stocks have been smoking hot over the trailing quarter, with the Alternative Harvest Marijuana ETF $MJ more than doubling since the election on November 3rd.

Considering this new leadership role over the near-term, today we're going to do a follow-up on our last deep dive into the space, which we published last fall.

Back then, we were simply looking for a bottom and mean reversion move higher, which we got... Now, with the industry making new highs, we want to see how things are looking on both an absolute and relative basis.

And as always, we'll check in on some of our past trades in the space and highlight today's strongest stocks, along with trade setups skewed in our favor that we want to use to express our bullish thesis.

Before we get into the weeds, let’s start at the industry level with the Alternative Harvest ETF (MJ).

...

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

In a post last month JC discussed the recent strength in Commodities and posed the following question...

If the CRB Index is above its 2016 lows and Crude Oil is above all those former lows from the past decade, how can we be bearish commodities?

Over the last few quarters, we've seen more and more intermarket relationships make a significant shift in favor of risk-assets.

Many are showing early signs of a structural reversal and others simply accelerating in the direction of their underlying trend.

From Bonds and Agriculture, to Chinese equities, and cyclical stocks like SMIDs, Materials...

Stocks getting squeezed are all the rage these days, and rightly so. Some of the moves have been epic. The reasons for each squeeze vary from stock to stock, but the price action is hard to ignore.

With that in mind, we've identified some potential short squeezes that also have the benefit of the technicals lining up in our favor. Check out our recent Freshly Squeezed report.

One of the names on the list looks like it's ready to go...

As February gets under way, it’s time to review positions with February options that remain open (haven’t already hit profit targets or been stopped out). This month there isn't much to discuss as most of our February options trades have already been closed out thanks to hitting their profit targets or getting stopped out.

Most trades I put on for All Star Options tend to have a minimum duration of 30 days (short premium plays) and often as long as 6-8 months (for long premium plays). As options approach expiration, greeks like theta and gamma start to become my enemy and whipsaw my P/L. Therefore, as options and spreads get into the expiration month, my best practice is to put each position on notice — it’s time to take action.

At the time of this writing, I've only got 2 remaining positions with Feb options.

In the scoreboard below I denote the date we exited each position:

There is a big difference between those who follow the market on a daily basis and those who take a quick glance at it once in a while. One category tracks moves for short term trades and the other looks out for long term investments.

What catches the attention of both these categories simultaneously though?

When the top two gainers of the day in Nifty50 go by the ticker names of SBIN and ITC.

This is not a frequent phenomenon and hence attracts more eyeballs upon occurrence.

Read on to know more.

SBI and ITC are like the elephants of the jungle - they move when they have to but stay under the radar for the most part. These are evergreen names that have the good fortune of being held in high standards in the eyes of the market, regardless of market conditions.

Ask around for long term investment tips, and all analysts big and small manage to throw these two names in the mix pretty often.

But why are we focusing on these names?

Has anything changed? Maybe.

Are we observing something new in the price action? Maybe.

Investors are so scared. They don't want to get burned. They've missed out on one of the greatest stock market rallies in history. They think it's too late for them to be buying stocks.

Here's the thing. I think we've barely even gotten started. This is the beginning, not the end.

Last week the Volatility Index saw its highest reading ever with the S&P500 within 5% of new all-time highs.

When people buy insurance at a faster rate than ever before, does that normally happen just before everyone is thankful they had that insurance? Or does that traditionally occur just after the disaster when it's not necessary anymore?

How funny is it that Saturday Night Live mentioned that the stock market is not working on 3 separate skits in the same episode last weekend?

Hilarious.

If SNL thinks the market is broken, that's probably good evidence that the market is working just fine.

Here's a good one from JP Morgan,

When...

JC and I conducted a great options webinar last night, attended by well over 500 people. It was a fun opportunity me to lay out some of the core options strategies I employ on a regular basis to make trades in a variety of trading environments. And the questions we received from the audience showed that they were engaged and enthusiastic, which makes it great for everyone.

Options volumes on US exchanges have been exploding in recent years as investors and traders are waking up to the power and flexibility that trading options provides. And our event last night was a reflection on that.

Anyway, at the conclusion of our call, JC teased a trade out of me I had not yet put on but was considering entering.