From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth 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.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at...

Even within this disastrous decade for Precious Metals, Gold Miners have still found a way to outperform whenever they get down here.

Look at this chart of Gold Miners $GDX relative to the S&P500. The last 2 times they got down here, it sparked periods of tremendous outperformance:

Big day today! I got Josh Brown to come on the podcast and talk about all things Technical Analysis and Financial Markets. Josh is probably friends with more Technicians across the country than almost anyone else. He respects what we do, and even works in some trend following systems at his own firm. We discuss all of it!

In this episode we talk about Sector Weightings in Markets, how RIAs can bring Crypto to the portfolios of their clients and why Gold peaked 40 years ago when adjusted for inflation.

We don't always agree on things, but that's what makes this fun.

Josh and I battle it out in this one. Give it a listen and let me know what you think!

Also make sure to Subscribe to Josh's Youtube Channel: The Compound RWM

Enjoy!

While the US Stock Market has pulled back a bit this week, we've seen $VIX pop its head back up above 23 and print its highest levels in a month. And this isn't entirely surprising given that the highly watched Russell 2000 $IWM has been struggling to hold on to its yearlong support level of around 210.

But has the "all-clear" signal for the bears fired? Is it time to pile in short? We're not convinced yet.

Meanwhile, we've seen some pullbacks in semiconductors stocks we own ($NVDA and $MU most notably) that may get us stopped out soon. But when we zoom out to the bigger picture, as seen via the $SMH Semiconductors ETF, we see that we've been in a range for quite some time now. And even if we'd lose the support of this recent consolidation range at around 290, we can expect the 270-275 zone to offer a new level of support:

In recent weeks, we've been making a point about the importance of the derivative markets. When leverage and open interest is as elevated as it currently is, futures markets tend to govern short-term price action.

One of the most effective metrics to gauge this data is through funding rates.

Not only do we use this data to get a read of the positioning of speculators to help shape our macro crypto thesis. We can also use it on a case-by-case scenario to find high-conviction short and long setups within the alts.

Let's start by addressing the question of what is a funding rate.

This is the video recording of the January 2022 Mid-month Conference Call.

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

One of the most important themes these days is the rotation between growth and value stocks. Groups like energy and financials have been breaking to new highs while growth and tech indexes have come under serious pressure.

So far, 2022 has been a true tale of two markets.

While cyclicals and value stocks appear to be gearing up for a momentous year, it looks like the party is finally coming to an end for the growth trade.

We want to lean on the value-heavy leadership groups for long opportunities in 2022. As for growth, we think it's likely to remain messy as interest rates continue to rise.  

When we look beneath the surface at growth and value stocks right now, our breadth data is confirming the action we’re seeing at the sector level.

Let’s dive in and discuss... 

Here's one way to visualize the opposing paths of large-cap value and large-cap growth right now. This indicator shows us the percentage of stocks above their 50-day moving averages for each of these indexes:

...

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

What started out as a potential bullish continuation pattern in the US Dollar Index $DXY has turned into a near-term top.

After weeks of failing to hold breakouts on an individual currency basis, the tight coil in the DXY finally resolved lower.

The brief reprieve in USD strength was immediately felt across markets last week, with cyclical/value stocks and procyclical commodities catching an aggressive bid.

Now that the headwinds associated with dollar strength appear to be easing, will risk assets enjoy a tailwind in the form of sustained USD weakness?

Or was this just the latest fake-out from the DXY?

Let’s take a look at a couple of charts and highlight the levels we're watching in the coming weeks and months.

First up is the US Dollar Index:

After the...

On this episode of Pardon The Price Action, we're talking about the implications of rising interest rates. This is no longer an environment where Growth stocks outperform. It's actually the exact opposite.

We're also seeing these signs from other countries around the world with much more exposure to the Value sectors like Energy, Materials, Industrials and Financials.

US Investors have a lot more exposure to Technology and Growth than almost every other country in the world.

I think Latin America is worth watching, China and many other emerging markets.

We believe this time IS different!

Check out the full video:

What if the outperformance we've seen from the United States stock market for so long is behind us?

Is your portfolio prepared for an environment where US stocks underperform the rest of the world?

What about your peers?

Do you think Financial Advisors across the country have positioned their clients to take advantage of outsized returns outside the United States?

I talk to a lot of people.

And my answer is no. A big fat obnoxious NO.

I don't think they're ready at all. And the pain could last a while.

By the time your average financial advisor gets off the golf course and notices how poorly positioned their clients are, it's usually much later in the cycle.

From the desk of Steven Strazza @Sstrazza

*** Click here to read the reveal post for this Mystery Chart ***

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.

It might be a ratio, a custom index, or maybe the 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 the price behavior 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?

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...