From the Desk of Ian Culley @Ianculley

Bonds are an absolute dumpster fire. 

Everyone knows fixed income is having one of its worst years on record. And, from the looks of it, we’ll all be dragging our Christmas trees to the curb before US Treasuries stage a miraculous comeback. 

Don’t get me wrong. I believe these safe haven assets will dig in and catch higher –  eventually. There’s just no sign of it happening any time soon.

Instead of focusing on the disappointing performance of bonds, let’s turn our attention to its relative trends against other major asset classes – stocks and commodities.

Here’s the commodities versus bonds ratio using the CRB Commodity Index and the 30-year Treasury bond futures:

The commodity/bond ratio completed a bearish to bullish trend reversal last year after violating a decade-long downtrend.

This major intermarket shift caught many off-guard, as 12 years of underperformance led the industry to...

The concept of “Tilt” is often discussed when things have gone awry. It’s usually associated with poor risk management and sloppy trading that has led to larger-than-expected losses.

You can no doubt find endless stories of traders in every timeframe who have gone on tilt and proceeded to wreck their month, their capital, and sometimes even their careers.

We’ve all experienced some degree of this in our own trading. It comes with the territory. It takes a rare human who possesses the mental fortitude to stay completely focused no matter what’s happening to their portfolio. Those people are out there – but they’re hard to find.

The downsides of going on tilt when our trades or strategies aren’t working out are fairly obvious.

But we rarely talk about when we go on tilt with a winning position!

Well, that was fun!

Yesterday we were treated to the latest interest rate hike from the Federal Reserve and a speech and Q&A with Fed Chairman Powell that apparently wasn't well received by the market as stocks slid furiously into the closing bell and continued the selloff into this morning.

Where we go from here is anyone's guess. Still, I'd like to take the opportunity to continue taking advantage of consistently elevated options premiums and put on a delta-neutral credit spread in an area of the market where I think some sideways rangebound action may be setting up into the end of the year.

Someone years back decided to convince people who are bad at math that the Nasdaq is a good representation of the stock market.

With every day passes, particularly in 2022, the market continues to prove how silly that whole thing is.

Whatever you need to do to remember it, do not EVER forget:

The NASDAQ is NOT the stock market.

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.

Welcome to the Short Report.

We...

From the Desk of Ian Culley @IanCulley

The US dollar has stopped going up!

In fact, it’s already registered a slightly lower high and lower low this past month. 

But we can’t call a top in the US dollar yet. While it came close to officially triggering a top last week, the lack of follow-through kept us in our seats.

With fresh monthly candles in the books, let’s review longer-term charts and reiterate key levels for ol’ King Dollar.

How do I measure performance?

In a nutshell, this is a question I received from a member of the All Star Charts community today.

Well, it depends. 

The short and obvious answer: I trade to make money. 

If I’m making money, good. If I’m not, bad.

Of course, there are also more nuanced answers and considerations – some more relevant than others. They come down to relative performance.

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 Steve Strazza @Sstrazza.

Welcome to Under the Hood, where we'll cover all the action for the week ended October 28, 2022. This report is published bi-weekly and rotated with our 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...

For so long it had been Bigs over Smalls.

People would even complain that it was only 5 stocks driving market returns.

Do you remember how hilarious that was?

Good, because it's so much funnier now.

Get this, those same people complaining that only 5 stocks were driving the market higher are now complaining that those 5 stocks aren't participating.

Market returns are currently being driven by all the other stocks. Those 5 big massive ones are doing their very best to hold the market down, but it's not working.

Investors are buying stocks, whether you like it or not. And they're buying the smaller ones at a much faster rate than their larger-cap counterparts.

Look at the Small-cap Russell2000 hitting new Year-to-Date highs vs the Large-cap S&P500.

And of course Small-caps are also hitting new 16-month...

There are 30 stocks in the Dow Jones Industrial Average.

This is the most important stock market index, both currently and of all-time.

In case you missed my explanation, you can catch up here.

Of the 30 stocks, 5 of them are already at New All-time Highs (2 more that are no longer in the Dow also closed at New All-time Highs).

And several more Dow Components are just a few percentage points away.

New all-time highs are NOT a characteristic of downtrends.

An expansion in new highs is NOT weak breadth.

Here's a Dow component that has been basing for a while. ...

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Monday November 7th @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Monday evening: