The average stock on the Nasdaq bounced over 40% off it's lows this summer.

That's a serious squeeze.

But let's remember that a lot of that stuff is junky and had gotten crushed, so of course they'll have strong bounces.

Over on the NYSE, the average bounce has been less pronounced but still got into the high 20s in percentage terms.

So today let's take a look at how each of the S&P Sectors have performed since the list of NYSE new lows peaked 2 months ago:

From the Desk of Steve Strazza @Sstrazza

The bulls have moved back into the driver seat over the past few months, as a good deal of technical damage was repaired during the summer rally.

It appears that the weakest stocks have at least stopped falling as growth indexes have transitioned to more constructive, base-building action since late Q2. 

And, more recently, the strongest sectors during the current cycle have reclaimed key levels. 

We’re talking about materials rallying back into their old range and energy stocks resolving above a shelf of former highs. 

As both cyclical sectors are now back above our risk levels, we are looking for the strongest stocks to buy to express a bullish thesis on these groups.

When we think about the strongest stocks within materials, the coal industry and its recent resilience is top of mind.

We see no reason why the relative strength from these stocks shouldn’t continue, so let’s dive in and outline some of our favorite charts in the space.

Before we do that, here’s our equal-weight custom index, which includes the largest coal stocks listed on US exchanges:

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From the Desk of Ian Culley @IanCulley

I can’t think of an area of the market we like more than energy.

Both energy stocks and commodities held up better than their peers during the recent bout of selling pressure. And now that they’re starting to reclaim key levels, we want to put our bullish bias to work.

I recently expressed my growing unease with a short crude oil position, given the mounting bullish evidence in energy. So, let's talk about how I plan to flip the book long crude oil futures on a break higher.

That's right, we're in the 'hood. Robinhood stock $HOOD, that is.

Steve Strazza has been pounding the table about this name for so long that JC and I finally relented and agreed that it's starting to become that "put up or shut up" time.

With the stock swimming just below $10 per share, JC said: "Let's just leverage into this thing! If it's gonna work, we'll crush it. If it's not going to work, we'll know pretty soon. Below $9 we're out."

Here's the chart that has our attention:

The AVWAP from all-time lows is our support.

Right on. High potential reward for limited risk is my kind of play.

So we're going to play this one with a Bullish Risk Reversal, having naked short puts pay for our long calls exposure.

Gas prices are going up?

Good.

That means our Energy stocks are probably doing well.

You see, we don't have any control over the cost of Energy. I don't work for the government. I'm not in the Energy business.

I don't know the first thing about drilling for Oil or Gas.

I'm just a random dude with a computer and some smart drinking buddies.

So for me, I have 2 choices:

From the Desk of Ian Culley @IanCulley

The US dollar Index $DXY is trading at fresh highs. Take a look around the currency market. It shows.

Recent attempts to fade dollar strength have failed. The euro has fallen to its lowest level since late 2002. And we’re beginning to see forex pairs experience fresh breakouts in favor of the USD.

It’s certainly not the best look for risk assets. But it’s offering us great trading opportunities, not to mention some very valuable information.

A couple of pairs that are providing both are the USD/CNH and the USD/CNY. Let’s take a look!

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.

Welcome back to Under the Hood, where we'll cover all the action for the week ended August 19, 2022. This report is published bi-weekly and rotated with 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.

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

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

The market has set the stage.

From a seasonal perspective, the back half of the year should be strong.

When you consider the bearish sentiment readings we're coming off of this summer, a massive shift in sentiment into year end makes perfect sense.

We've seen the breadth improvement, as we get more and more stocks making new short-term highs, and now sector rotation has started to kick in.

SO WHAT'S THE CATALYST?

Is Ethereum going to be worth more than Bitcoin one day?

Yea probably.

I think so.

And remember, I really don't care either way. I would just like to be on the right side of the trend, that's all.

In this world of crypto, especially in Bitcoin and Ethereum, people are very passionate about their opinions.

At Allstarcharts we are not.

All I know is that Bitcoin is now worth around $400B in market cap while Ethereum is closer to $200B. So ETH has some work to do.

And when I look down at this base, in my experience, this is precisely the work that it's needed to be doing...

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

From the Desk of Steven Strazza @Sstrazza

Stocks have enjoyed a powerful rally off their summer lows, as bulls have been in control for about two months now.

A lot of technical damage has been repaired during this time. 

The outlook from sentiment and seasonality assure us the environment is ripe for a bottom. 

Breadth thrusts are stacking up and suggesting we could be in the early stages of a new bull market.

And risk appetite is gradually reentering the market, supporting the bullish price action.

Today, we'll review one of our favorite intermarket relationships, the discretionary versus staples ratio. 

By comparing these two consumer segments, we garner valuable insights about the current market environment and risk appetite in particular.

Here's the large-cap Consumer Discretionary $XLY versus Consumer Staples $XLP ratio:

As you can see, XLY/XLP just reclaimed its 2018 highs after collapsing beneath this key level earlier in the year. 

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