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 their direction and make them a pretty penny.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest "Under The Hood" column, where we'll cover all the action for the week ended September 17, 2021. This report is published bi-weekly and rotated with our "Minor Leaguers" column.

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.

From the desk of Steve Strazza @Sstrazza

Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Is This Drawdown Any Different?

The S&P 500’s 50-day moving average has garnered some attention this year, and for good reason.

During every month except April, the S&P 500 has tested its 50-day average. Only after the initial test in February did the index fall further below the moving average than where it is today. Every other instance has ended with a sharp reaction higher. Whether that happens this time remains to be seen. With investors re-evaluating their bullish views on stocks, the dollar pressing on new highs, and the action beneath the surface showing increasing vulnerability, bulls want to see more evidence of risk-seeking behavior. Seeing stocks dig in at this key level would be a great place for that to start.

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

Risk assets have been getting hit for the past two weeks. Stocks have been under pressure, and commodities have been struggling.

Meanwhile, we never saw any real follow-through lower in the Dollar, as DXY has bounced right back to the upper bounds of its year-to-date range.

But, as usual, we continue to see pockets of strength in the commodities complex.

Last week, we wrote about the resilience from base metals, such as Steel, Nickel, and Aluminum.

More recently, we're seeing relative strength from the Energy complex. That's what we're going to talk about today...

Energy is actually the only sector that's positive over the trailing two weeks. And Energy futures haven't been looking too shabby, either.

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

In today's post, we’re going to do an update on some of our favorite and most essential intermarket indicators. We’ve also updated our risk checklist so we can discuss the changes that have occurred over the past week or so.

Are market participants embracing more or less risk these days? 

We’ll get there.

We've been obnoxious about our theme that this remains a messy environment for stocks, which is nothing but classic "year two" bull market behavior.

But guess what: That’s just what it is right now. You have to play the cards you’re dealt, and right now they’re not the best. This is particularly true for trend-followers like ourselves.

Let’s talk about why.

Our custom “Risk-On” and “Risk-Off” indexes have been a perfect illustration of the 2021 market environment.

This is what a hot mess looks like… and it’s true for both custom indexes as well as the ratio of the two!

From the desk of Steve Strazza @sstrazza 

Welcome to our latest RPP Report, where we publish return tables for various asset classes and categories, along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our weekly state of the union address, as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

In our RPP Report from the end of August, we discussed how the weakest areas were registering failed breakdowns and digging in at support.

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 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 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 Steven Strazza @Sstrazza and Ian Culley @IanCulley

The US Dollar has been trapped in a sideways trading range for the trailing 12 months now. The primary trend is lower, and we continue to see near-term weakness from the DXY Index as well as most USD crosses.

Commodity-centric currencies have been some of the best performers versus the Dollar since early last year, although most of them have been correcting since Q1 or Q2, giving back a good deal of their earlier gains.

So, will we see a resurgence back to those risk-on pairs, or will they keep sliding lower against the Dollar?

Today, we’re going to focus specifically on the currencies of some of the largest oil-producing countries in the world.

This should give us information not just about currency markets, but also commodities and risk assets in general. 

Let’s talk about it.

An easy way to aggregate and measure their performance as a group is by analyzing our Petrocurrency Index. It includes currencies like the Canadian Dollar $CAD, the Russian Ruble $RUB, and the Brazilian Real $BRL, among others.

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 their direction and make them a pretty penny.

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 late last year and started rotating it with our flagship bottoms-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 we think 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.