From the Desk of Kimmy Sokoloff

The January CPI data came in a bit warmer than expected, and the market went every which way.

We also had a few Fed speakers today, so that added to the volatility. 

From the Desk of Willie Delwiche.

The market has been focused on the headline CPI and eager to declare the inflation battle won. The Fed is less concerned with changes that are fueled by outliers and focuses more on the central tendency and underlying trend in inflation. The median CPI in January posted its third largest 1-month change on record and the 12-month change climbed to a new high. So long peak inflation - we hardly knew you.

Why It Matters: With the market focused on the pullback in headline inflation, bond yields pulled back from their recent highs expectations of rate cuts later this year became more widespread. As it has become clear that the Fed is focused on still-persistent underlying inflation, the market has had to play catch-up. Fed funds futures now match the Fed’s expectations that rates will finish this year above 5% and today for the first time in 15 years we have Treasury yields with a 5-handle. While inflation expectations are on the rise and the underlying trend in yields remains higher, we are not seeing signs of macro-related stress. That keeps the path of least resistance...

From the Desk of Ian Culley @IanCulley

It’s messy out there.

The CPI data came in a little warmer than expected today. And currency markets aren’t quite sure what to make of it.

Despite the overarching range-bound action and intraday indecision, I continue to find trade setups with well-defined risks.

Today, I’ll outline another vehicle to short a potential falling dollar – the Swiss franc.

I prepared to get long the USD/CHF pair last October. But the trade never materialized. Instead, it caught lower as the USD downtrend picked up steam in early November.

Fast-forward a few months, and I’m ready to short the USD/CHF pair.

Before we break down the setup, let’s zoom out:

The USD/CHF pair has remained in a structural downtrend since the 2000 dot-com bubble peak. We can interpret the past decade as a bearish consolidation within an ongoing downtrend. 

Some...

We had a resting GTC order filled at our profit target in the Paid-to-Play portfolio today:

The next new position in our Paid-to-Play portfolio is:

From the Desk of Kimmy Sokoloff

Happy Valentine's Day!

We have the CPI print at 8:30 a.m. ET, and the futures are full speed ahead as I write this.

The largest insider buy on today’s list comes in a Form 4 filing by Longitude Capital’s Juliet Tammenoms Bakker.

Tammenoms-Bakker reported a purchase of $6 million in RxSight, Inc $RXST, where she serves as a director.

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.

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.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to...

It's the weekly Gold Rush!

This week Strazza and I dig into the COT profile for Gold and Silver, revealing the sentiment behind the smart money.

Check it out...

From the Desk of Ian Culley @IanCulley

What will ignite a precious metal rally to new all-time highs?

We often discuss the dollar and real yields as critical catalysts for a sustained uptrend for gold and silver. It’s simple: These shiny rocks will struggle if the dollar and rates continue to rise. 

But there’s more.

I want to share another crucial piece of the puzzle – commercial positioning.

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts 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.

The 30yr Retests Prior Cycle Highs

The US 30yr yield refuses to break below its prior cycle highs. This is a logical level for yields to find support and churn sideways which could mean more messy action for long-duration assets such as bonds and growth stocks.

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 big picture context 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:

• This week, our macro universe was negative, with 85% of our list closing lower with a median return of -1.05%.
• The Volatility Index $VIX was the winner, closing with a 12.00% gain.
• The biggest loser was Lumber $LB, with a weekly loss of -16.05%.
• There was a 4% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 13%.
• 9% of our macro list made fresh 4-week highs.
• ...

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 Kimmy Sokoloff

$SPY broke above its eight-day moving average and trended higher pretty much all day.

It feels like the market wants to head higher tomorrow. But that could change on a dime with the CPI report.

This is the video recording of today's LIVE Short Squeeze Video Special.

We walk through every single one of our favorite most shorted stocks, including entry points and targets.

These are the exact names we want to buy in THIS particular market environment.

It's a can't miss video:

The Value Line Geometric Index peeked above its August high but it continues to struggle with sustaining strength. We don’t have evidence at this point of that being a meaningful peak but for now this proxy for the performance of the median US stock is trodding across well-traveled ground.

More Context: The Value Line Geometric index has a penchant for living between round numbers. In the years prior to COVID, it moved up from 500 to 600 and back down to 500. During 2020, it dropped to 300 before recovering and settling in beneath 500. A break above that level led to a quick test of 600, Further strength carried it to 700 in late 2021. It paused at 600 before spending most of last year moving back and forth between 500 and 600. After a strong start to the year for stocks, some near-term consolidation (especially in the US) would not be surprising. If recent patterns hold, that could mean the Value Line Geometric Index moving back toward 500. If that scenario is going to play out, we are likely to see more...

From the Desk of Ian Culley @IanCulley

What will ignite a precious metal rally to new all-time highs?

We often discuss the dollar and real yields as critical catalysts for a sustained uptrend for gold and silver. It’s simple: These shiny rocks will struggle if the dollar and rates continue to rise. 

But there’s more.

I want to share another crucial piece of the puzzle – commercial positioning.

We analyze the Commitment of Traders (COT) report generated by the Commodity Futures Trading Commission (CFTC), which updates the positions of the largest speculators and commercial hedgers weekly.

We publish a table with this data in our commodities post every Friday.

Our focus lies solely on the commercial hedgers for one reason – they represent the largest short sellers for any given market. By monitoring these players, we discern the attitudes of the strongest hands.

Think of the COT as a sentiment gauge.

Commercial hedgers reached extreme levels in gold last fall, coinciding with significant troughs in price in 2016 and 2018:

Strong hands move markets. And the strongest hands were...

JC had a great post this weekend about our favorite Magazine Cover Indicator violator -- The Economist. Go give it a read and then come on back here.

Are you caught up? Good.

You read what JC said to do. Let's do it.

We began last week arguing the case for short-term patience while emphasizing that the primary trends have shifted higher.

As we move into the middle of February, seasonality trends suggest a choppy couple of weeks ahead.

At the same time, momentum in the US dollar has accumulated in recent days, as we observe some mild selling pressure in crypto markets. With the CPI release on Tuesday, it's reasonable to expect this volatility to continue.

This comes as Bitcoin retraces following its first retest of the August 2022 highs.