From the Desk of Louis Sykes

They're everywhere.

The long-awaited James Webb Space Telescope images...

Moments like these are not only significant for the scientific quest. They also deeply change the human condition and what we think is possible.

When Copernicus discovered the heliocentric model -- that the universe doesn't rotate around Earth -- it humbled humanity.

When Newton discovered that the motion of the celestial bodies followed strict laws of mathematics, it gave a seemingly entropic universe order.

When man landed on the moon, it changed our entire perception of what's possible.

And when the Hubble Space Telescope and the more recently launched JWST send back awe-inspiring images, it gives us a perspective of the cosmos we've never seen before.

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

The largest insider transaction on today’s list is a Form 4 filing by famed tech investor Bill Gurley.

You can't overstate what a bully the Dollar has been towards stocks in the U.S. and around the world.

We've talked about new 20 year lows for Japanese Yen, and the recent parity with the Euro, of course.

But now take a look the Emerging Markets Currencies ETF breaking down to new all-time lows:

The S&P 500 just had its worst first half in more than 50 years.

Based on CPI, if you’re in cash, you’re losing 8.5% a year.

This was the worst start to the Bond Market since 1842.

So what do you think gold is doing in that environment?

Down near new 52-week lows...

We've adjusted a position in the Paid-to-Play portfolio today:

Sometimes it's just best to ignore breakouts.

It's all about knowing what environment we're in and adjusting our tools and strategies accordingly. In environments like these, buying into breakouts is a dangerous game.

Seriously, take a look at the failed breakouts all over the place.

Pull up a watchlist of cryptos and you'll see a ton of whipsaws.

From the desk of Willie Delwiche.

I'm away for a few days enjoying Wisconsin’s Door County Peninsula. It's been great to camp and explore in what is widely known as “the Cape Cod of the Midwest.”

I'll be back Thursday for our regularly scheduled Town Hall but in the mean time, here's a quick look at our latest Bull Market Re-Birth Checklist.

Today we're going to discuss a long idea from the Services sector. It's a name you've heard of in the logistics departments. Let's take a look!

The Massachusetts-based hedge fund Wellington Management Company has been active, as it filed three separate 13Gs yesterday.

The filings revealed passive ownership stakes of about 10% in Whiting Petroleum $WLL and Steven Madden $SHOO.

In bear markets, you're going to find more stocks making new lows than new highs.

That's just basic math.

In bull markets, you'll see the opposite.

Here's what today looks like: 33 consecutive weeks of more stocks hitting new lows than new highs.

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest Under the Hood report, where we'll cover all the action for the week ended July 8, 2022. This report is published bi-weekly and rotated our Minor Leaguers report.

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.

Watch this video for a behind-the-scenes look at our process.

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

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...

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.

Banking on Support

Banks, broker-dealers, and capital markets have all been underperforming despite the rising rate environment. The entire financial sector has been a disappointment since last year.

When it comes to banks, the Regional Banks ETF is an excellent indicator to measure risk appetite. When times are good, these stocks are participating. 

As you can see in the chart, price is currently holding above the AVWAPs from the 2018 highs and 2020 lows. This level represents a logical potential support zone.

Notice in the lower pane that momentum (as measured by the 14-period RSI) never reached oversold conditions during the current correction. Not many industry groups can say the same.

As long as this economically sensitive group remains above this confluence of support, it is a positive for the overall market.

...

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:

• Our macro universe was mixed this week as 51% of our list closed lower with a median return of -0.14%.
• The US 10-Year Yield $TNX was this week's biggest gainer, rallying over 20 basis points.
• The biggest loser was the Volatility Index $VIX, with a weekly loss of -7.72%.
• There was a 2% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 6%.
• 11% of our macro list made fresh 4...

As Strazza mentioned in our Telegram live chat this morning: "Not too many charts look as good as this one right now."

It feels hard to comprehend that we're finding leadership in Chinese tech, internet, and auto stocks, but it's happening. Politicians lie. Prices don't.

And one name we've got an eye on has been coiling in an extremely bullish high flag pattern.

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

In our last letter, we reviewed the recent quarter and provided a structural view of the market.

In a tape as messy as this, we're focusing a good portion of our strategy on longer time frames. The market has been and continues to be a mess on shorter time frames, while equity markets still firmly reflect risk-off behavior.

With the market providing extreme readings, these are conditions by which we can anticipate a mean-reversion rally higher. At the same time, trying to catch this move in a period of continual whipsaws will be difficult.

The market has work to do.

We've been in a Bear Market since February of 2021 when stocks peaked. Since then it's been a slow deterioration ultimately hitting almost every sector, with some areas just getting absolutely destroyed.

But just to keep it simple, the bottom line is we're below overhead supply in almost every case. There are exceptions, but I think the S&P500 shows what's really going on for the average and median stock or sector.

This is a top, and price is below former support: