From the Desk of Ian Culley @IanCulley

Anyone can enter a trade. It’s easy. 

But before you step up to the line to place your bet, you must have a plan – a set of rules rooted in risk management to guide you through your trade.

There’s no way to enter and manage a trade if you don’t know where you’re right, where you’re wrong, and where you’re taking profits. Without a plan, your strategy and philosophical approach to the markets don’t matter. 

That brings us to the British pound.

Here’s a chart of the GBP/USD cross:

A few weeks ago, we outlined a short setup in the GBP/USD pair. The pound was breaking down to levels associated with the Brexit sell-off, and we wanted to ride that trend lower.

Around the same time, the EUR/USD reached parity, as the US Dollar Index $DXY hit its highest level since November 2002. "Long dollar, short everything else" was the trade.  

But now that the GBP/USD is back above our risk level around 1.2025, we can’t...

A funny thing happened this Spring.

Inflation expectations peaked. Our equally-weighted Commodities Index peaked. And then the Copper/Gold ratio collapsed.

All of these point to lower Interest Rates.

And so here we are with the US 10yr Yield struggling with those 2018 highs.

From the desk of Steve Strazza @Sstrazza.

Welcome to the latest edition of Under the Hood, where we'll cover all the action for the week ended July 22, 2022. We publish this report bi-weekly and rotate it with The Minor Leaguers.

What we do here is 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.

Watch this video for a behind-the-scenes look at our process.

Whether we’re measuring increasing interest based on large institutional purchases, unusual...

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...

This to me is the big one.

The chart below is the one I'm watching the closest.

You guys have been hearing me pound the table about the US Dollar and what a hard time stocks and crypto will (continue to) have in a stronger Dollar environment.

So here you have it. This is the Emerging Markets ETF $CEW back to the same level where it bottomed out the only 2 other times it was ever down here:

I remember 2010-2011 like it was yesterday.

Precious metals were all the rage.

Silver miners were the meme stocks of their day.

There was so much money being made in Silver.

And then all that changed.

No one has heard from those silver surfers ever again.

And now here we are watching the Silver ETF $SLV close the week at its lowest price in history relative to the S&P500:

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

From the desk of Ian Culley @IanCulley

Commodities have been on the ropes for more than a month. As for commodity stocks, they’ve been under pressure since the start of Q2.

But the steep decline in these inflationary assets is beginning to slow – and it couldn’t happen at a more logical place.

The CRB Index and numerous bellwether commodity stocks are digging in and finding support at key levels. Whether these levels hold is anyone’s guess.

But the first step of the base building process is to stop going down. 

Let’s take a look.

First up is the CRB Index:

After a meteoric rise off the pandemic lows, commodities are experiencing their first significant correction in two years.

It’s not surprising the index stopped going up at a shelf of former highs from 2012 and 2014. There’s obviously a significant amount of resistance at those levels.

Now, the question is whether demand will come in at this critical shelf of...

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs. We’ve also sprinkled in some of the largest ADRs from countries that did not make the market-cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let’s dive in and take a look at some of the most important stocks from around the world.

Here’s this week’s list:

...

You see what happens when the US Dollar isn't ripping higher every day?

I wasn't making this up.

It's all about the Dollar my friends.

And Dollar Futures aren't even off by that much, just down a couple of points over the past week.

But still, the Dow is up almost 2000 points, Ethereum is up 60% and Active Managers just posted their second highest weekly increase in exposure in the history of the NAAIM survey:

From the desk of Ian Culley @IanCulley  

Buying bonds is finally becoming an attractive proposition again.

For months, we’ve noted the lack of confirmation from intermarket ratios such as copper versus gold, regional banks versus REITs, and high-yield bonds versus US Treasuries.

These ratios typically trend in the same direction as interest rates. But this hasn't been the case since last year.

And when we consider that yields are trapped below major resistance zones, we really like the counter-trend opportunity bonds are offering at these levels.

Let’s review a few setups from our Q3 Playbook we like for buying a bounce in bonds.

When it comes to getting long Treasuries, it’s all about the former 2018 lows. It doesn’t matter what...

From the desk of Steve Strazza @Sstrazza

Monday night we held our July Mid-Month Conference Call, which ASC Premium Members can review here.

In this post, we’ll summarize the call by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!