From the Desk of Ian Culley @IanCulley

Precious metals deserve the benefit of the doubt.

These shiny rocks are in the early stages of their next secular bull run. But I won’t let my bullish bias detract from the obvious: Gold has seen brighter days.

Overhead supply dominates the charts while risk appetite cools and prices fall toward critical support levels.

Is it time to buy the dip? 

No, especially as investors focus on more attractive investments…

From the Desk of Ian Culley @IanCulley

I recently outlined five reasons to bet on energy.

While I stand by my line of reasoning, I did manage to leave out one overarching theme. And it’s an important one!

It’s a market theme that’s played out for almost three years, extending beyond energy to encompass commodities as an asset class.

I’m talking about the commodity-bond ratio…

Commodities relative to bonds was the most impactful high-level chart headed into 2021.

A major trend reversal favoring raw materials over US treasuries signaled a new, wild world on the horizon – a world characterized by inflation and rising interest rates. 

This shift in relative strength caught many investors off guard as commodities also outpaced stocks for the first time in over a decade.

Shockingly, commodities were back in the conversation as analysts struggled to deem the energy space a viable investment. (As if the price charts didn’t provide ample evidence.) 

Meanwhile, energy stocks...

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

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that. Click here to check it out.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

*Click table to enlarge view

We filter out any laggards that are down -5% or more relative to the S&P 500 over the trailing month.

Then, we sort the remaining names by their proximity to...

From the Desk of Ian Culley @IanCulley

Yields are rising worldwide. 

US treasuries continue to fall after a brief pullback in price. 

Now, Chinese government bonds are pressing toward fresh lows.

Sovereign debt epitomizes downside risk. And Chinese bonds are on the cusp of a significant breakdown – a breakdown that spells more trouble for global bond investors.

Check out the VanEck China Bond ETF $CBON:

CBON aims to track the ChinaBond China High Quality Index (debt mainly issued by the People’s Bank of China). And like US treasuries, Chinese government bonds are flirting with fresh multi-year lows.

I have been adamant regarding a bearish bias toward US bonds. (In fact, I think they’re an excellent short.) 

A similar outlook extends to Chinese government-issued debt if and when...

From the Desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as "a market of stocks."

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions. But there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.

Now, we're also highlighting lagging stocks on a recurring basis.

We publish this column every other week,...

From the Desk of Ian Culley @IanCulley

It was do or die for the yellow metal a couple of weeks ago.

Gold chose “do.”

Buyers sprang into action, defending a critical former support level while driving prices higher. 

That valiant effort may have only prolonged the inevitable: a period of sustained weakness.

Don’t get me wrong. I’m not playing the role of a Debbie Downer this week.

I still believe gold is in the early innings of a new secular bull run.

Why?

It’s pretty simple. All we have to do is switch the denominator to any other global currency.

Gold has already broken out versus every currency in the world – except the US dollar. 

And that, folks, is the crux of the problem.

The US dollar!

From the Desk of Ian Culley @IanCulley

“Can’t Stop, Won’t Stop” blared the cover of Bloomberg Businessweek less than a week after the US Dollar Index $DXY peaked last September.

Unbelievable timing.

We can’t make this stuff up!

While the DXY has undergone a significant correction since, the message is just as appropriate today as it was then.

The dollar can’t stop.

It’s ripping higher this morning, breaking to fresh six-month highs as it nears a key area of former resistance.

Those mounting breakouts and breakdowns favoring the USD from mid-August are sticking their moves. 

Have no fear, or "FOMO," if you missed any of those trades.

These next two dollar pairs offer well-defined entries using one of my favorite short-duration chart patterns…

The flag.

Before I outline the trade setups, here’s a quick reminder of what constitutes a flag or pennant (triangular version), according to Robert D. Edwards and John Magee’s classic...

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended August 31, 2023. This report is published bi-weekly and rotated 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.

Click here for a behind-the-scenes look at our process.

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

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.

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...

From the Desk of Ian Culley @IanCulley

Seasonality is not the most heavily-weighted data point in my analysis.

It doesn’t even make the top three: price, price, and price.

Nevertheless, tracking seasonal patterns has proven quite valuable in past experiences, especially regarding commodities. (We discussed it today on What the FICC, outlining three strong seasonal tailwinds heading into the fall. Check it out below.)

Raw materials are clearly affected by the earth’s rotation around the sun. 

And while these trends fail to produce explicit entry or exit signals, they do provide insight into potential market conditions (not unlike sentiment or COT positioning). 

I use seasonality to help guide my focus to those areas of the market that deserve additional attention. Areas such as…

Sugar!

I’ve been watching sugar futures since the beginning of the year, waiting for a breakout. 

And boy, did it deliver!

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

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:

...

From the Desk of Ian Culley @IanCulley

US Treasuries have stopped falling – for the moment.

But it’s a mixed bag.

Short setups for long-duration bonds remain in play despite pullbacks underway, while the shorter end of the curve never managed to break down.

It’s messy.

So, let’s run through the US Treasury futures for an updated read on the bond market.

First up is the 30-year T-bond:

The 30-year has broken below a shelf of former lows at approximately 123. It’s a short as long as it’s below that level with a measured target of 113’15.

But the 30-year is finding support at last year’s lows, bouncing higher toward our line in the sand.

Pullbacks such as this are common. And last year’s low marks a logical area for buyers to support price.

Nevertheless, the breakdown remains intact as momentum holds within a bearish regime after recently hitting oversold conditions.

Moving down the...