From the Desk of Ian Culley @IanCulley

After months of selling pressure, the most widely followed commodity contracts are testing critical potential support levels.

More importantly, these support levels are the prior-cycle highs marked by the 2018 peaks. If there was ever a place where the bulls needed to step in and repair the damage this is it!

But, if these levels fail, we’ll have to rethink the structural uptrend in commodities.

Let’s run through the charts.

First, we have our commodity index that equal-weights the top 33 contracts in our universe:

Earlier this week, the index completed an 18-month top and broke to its lowest level since April 2021. This highlights the broad selling pressure across the commodity space and the need for a...

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:

...

Who's left to sell?

That's the question I find myself asking as we finish up the 3rd Quarter today.

(We'll discuss it all Monday night 6PM ET during our Live Monthly Charts Strategy Session)

Since the market peaked in February 2021, it's been a slow grind lower for stocks all over the world.

We're now approaching 20 months of this ongoing bear market.

It's no longer a secret that stocks are going down.

You can see it in the Put/Call Ratio hitting levels last seen at the 2018 and 2020 market lows:

From the Desk of Ian Culley @Ianculley

Don’t let credit spreads fool you. 

High-yield debt hasn’t blown out relative to Treasuries. Regardless, the largest markets in the world are buckling under pressure.

You have to look outside the US and beyond high-yield corporate bonds to see the stress. Here are three cautionary data points to consider: European sovereign spreads, US bond market volatility, and the steep decline in investment-grade bonds.

When you weigh the evidence, it’s clear risks are rising for US markets. 

Let’s look at the charts!

First, here's a look at European sovereign spreads:

At first glance, these spreads look similar to high-yield spreads. They’re chopping sideways at or near their peaks from the 2020 crash. Nothing alarming or unusual from the countries at the highest risk of default – Spain, Italy, or Portugal. 

It’s a different story when it comes to the UK, as the spread between the UK-...

You see what just a little bit of Dollar weakness does to this market?

I'm telling you. I'm not making this up.

Now here's the thing. Let's remember that extreme volatility IN BOTH DIRECTIONS is commonly found near turning points.

Last time the US Dollar Index had a single day GAIN as large as Friday's was 3/19/20.

Last time the US Dollar Index had a single day LOSS as large as Wednesday's was 3/26/20.

The Dollar Index peaked on 3/20/20. Stocks bottomed the very next trading day on 3/23/20.

Here's a look:

For this week's trade, we're Selling the BRKB November 260 Puts Naked

Get the full details, risk management procedures and targets for this trade here:

Here we are back to the June lows in both the S&P500 and Nasdaq100.

Support held for a few days this week at the same prices that it held 3 months ago:

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.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey...

...Berkshire "B" shares, to be precise.

One of JC's favorite trades when volatility is spiking and bearish sentiment seems a little overdone on the downside is to either buy stock in Berkshire Hathaway $BRK.B or even better -- sell some naked puts to fade the fear.

During our morning meeting today, JC was feeling that the time was right to pull the trigger on this idea again.

Selling naked puts is the move for us today, but we have to be aware that earnings are on the horizon in early November -- which may be accounting for some of the extra premium in November monthly expiration options.

As you can see from this chart, $BRK.B has undercut a significant level ever so slightly, but if this move is false, the whipsaw back up should be swift:

From the Desk of Louis Sykes @haumicharts

There's a lot that we can learn from Warren Buffett, who many consider to be one of the greatest investors of all time.

One of the most important lessons of all of them is that there are no called strikes on Wall Street. In other words, in liquid markets, you're not penalized for “missing” a trade.

The market doesn't guarantee traders much. But we can be certain there will always be future opportunities. We're not venture capitalists running rounds on private companies where a single deal can make or break our year.

Instead, we operate in public markets, where there will always be a multitude of setups.

In other words, we're not penalized for not swinging like we are in baseball.

With Bonds getting destroyed this year, it's put pressure on growth stocks, because of their long-duration characteristics.

As rates rise, it puts a lot of pressure on growth stocks. That's why historically the more Value oriented stocks and sectors tend to outperform when rates are rising.

When rates are falling that's when growth stocks usually thrive the most.

We all know this. The data is free.

BUT, a funny thing has happened over the last few months.

With bonds continuing to collapse and breaking those summer lows, the Nasdaq has been outperforming the S&P500.

What does the stock market know that we don't?

From the Desk of Ian Culley @IanCulley

The calls for a dollar top are growing louder as analysts claim the advance is overextended. 

They’re right. But pushing further into overbought territory is exactly what parabolic rallies do. And many of the technical tools supporting the thesis that the dollar is topping do not apply. 

In practice, mean reversion tools such as oversold/overbought conditions, price exceeding the upper bounds of a Bollinger Band, or the percentage gain above the moving average du jour are best used in trendless markets. 

Does the dollar look trendless? Absolutely not! 

Don’t let these data points distract you. Let’s instead put the current DXY advance into perspective by focusing on historical price action.