From the Desk of Ian Culley @IanCulley

It’s commodities over bonds.

In fact, we’re now in an everything-over-bonds environment as rates continue to rise. 

Looking for an uptrend?

Just place US Treasury bonds or the Japanese yen in the denominator, and voila!  

I consider the commodity-versus-bonds ratio one of if not the most important high-level intermarket ratio in our deck.

Why? Because it reveals the inflationary backdrop that colors the entire market,  determining secular leadership between asset classes and US stocks. 

And it’s hinting at the next trend in relative strength…

Check out the commodity-versus-bond ratio, as measured by the relationship between the CRB Index and 30-year Treasury bond futures:

This is just a friendly reminder that the most bullish period of the entire 4-year cycle has just come to an end.

How'd you do?

Stocks broke records in terms of performance and have been in the midst of a raging bull market, driven by sector rotation and breadth expansion.

All of this is perfectly normal.

Stocks did very well at exactly the time that they were supposed to.

Not sure why so many are surprised by it.

Now that even the biggest permabears threw in the towel and started turning more optimistic, we are now entering the most bearish time for stocks:

From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

We love our bottoms-up scans here at All Star Charts. We tend to get really creative when making new universes as we want to be sure they will deliver us the best opportunities the market has to offer.

However, when it comes to our latest project, it couldn't be any simpler!

With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US stocks.

Welcome to The Junior Hall of Famers.

This scan is composed of the next 150 largest stocks by market cap, those that come after the top 150 and are thus covered by the Hall of Famers universe. Many of these names will someday graduate and join our original Hall Of Famers list. The idea here is to catch these big trends as early on as possible.

There is no need to overcomplicate things. Market cap is a quality filter at the end of the day. It only grows if price is rising. That's good enough for us.

From the Desk of Ian Culley @IanCulley

Rates are on the move again.

The US 30-year Treasury yield $TYX cleared numerous hurdles this week. 

It broke above a shelf of former highs, climbing to its highest level year-to-date. And, perhaps more importantly, it reclaimed its former 2014 high.

Add a potential failed breakdown in the US dollar index $DXY, and it’s starting to feel a lot like 2022.

But should we expect another bloodbath?

…Not necessarily.

Here’s a quick look at the US 30-year yield resolving higher from an 8-month consolidation:

This is the video recording of our August 2nd Monthly Charts Live Strategy Session

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.

From the Desk of Ian Culley @IanCulley

Time seems to move faster during bull markets.

I have my theories, and they all revolve around having fun.

One thing is certain: The month of July is now behind us. 

I can’t believe we’re more than halfway through the year and a month into Q3!

Since it’s August 1, let’s keep the good time rolling by reviewing the most important monthly chart in the deck…

It's the US Dollar Index $DXY.

The US dollar acted as a Chief Headwind for Global Risk Assets last year, with a little help from the Fed.

All eyes are fixated on King Dollar as it straddles an area of former-resistance-turned-support:

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

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

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

From the Desk of Ian Culley @IanCulley

I find the general distaste for precious metals amusing.

It cracked me up when a close friend referred to gold as “hot garbage” at the start of the year. The Nasdaq 100 was trading almost 36% off its 2021 zenith. And gold was within striking distance of its former all-time highs.

Yet gold was trash in this investor’s eyes.

That’s information.

Information that got me thinking about a rally in precious metals…

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

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.

The fact that Energy hasn't even broken out yet really stands out to me.

Energy, and commodities in general, have been left for dead this year.

Investors have forgotten about that third asset class: Commodities.

It's not just stocks and bonds kids.

There are Commodities too!

Here's the Energy Sector Index, flat over the past 15 years.

It still hasn't even broken out:

I still don't think the second half of 2023 is going to look like the first half.

A lot of things could be different.

Let's remember, in the back half of 2022 almost every stock and sector was already going up, EXCEPT for Mega-cap growth.

And then in early January, they got the rotation they were looking for, and it became Tech and Growth as the leaders of this Bull Market.

Now that we're in Month #14 of this Bull Market regime, and we've seen several cycles of rotation already, I think it's time for another one.

First of all, take a look at the Nasdaq100 $QQQ currently running into former resistance from late 2021, that preceded the failed breakout and ensuing collapse: