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 their direction and make them a pretty penny.

Then we flip through our list of stocks flashing...

Are you seeing this?

Inflation Protected Treasuries are outpacing nominal yielding Treasury Bonds. We're now at the highest levels since the Great Financial Crisis.

For those new to fixed income, this is the bond market expressing its thoughts about inflation.

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.

We recently decided to expand our universe to include some mid-caps…

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.

The way we did this is simple…

To make the cut for our new 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...

It's Saturday Morning Chartoons time. 

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.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

Equities continue to get hit. And yesterday, commodity-related stocks were not immune to the selling pressure.

Energy, metals, and natural resources, in general, all sold off into the close. The inflation, interest rate, and commodity trade had a really rough week.

It's never a good thing when the leaders get hit like this. At the same time, two days really doesn’t make a trend.

Before we get sucked into calling peak inflation, let’s zoom out and put all this near-term volatility into the right context.

When we do, it reconnects our eye with the underlying trend – which is unequivocally higher. It also becomes clear that many of these stocks are finding resistance at logical levels – areas where we would expect these stocks to digest gains. 

And that’s exactly what they’re doing!

Let's take a look!

First up is a triple pane chart of the Metals & Mining ETF $XME, Copper Miners ETF $COPX, and the Steel ETF $SLX: 

This chart gives a great read on how base and industrial metal stocks are doing.  

XME...

From the desk of Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

And here’s how we arrived at it:

• Filter out any stocks that are below their May 10th, 2021 high, which is when new 52-week highs peaked for...

Monday night we held our April Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

A couple weeks ago we pointed out that the stock market was questioning the rise in rates.

Defensive areas we would expect to underperform in the current environment such as utilities and REITs are actually outperforming.

And the names we would expect to do well – specifically banks – can’t seem to catch a bid on either absolute or relative terms.

This is concerning from a broader intermarket perspective. But it’s not the complete story.

While our stock market ratios are not supportive of higher rates, when we look within the bond market, we’re seeing the opposite.

Not only is there a synchronized global rally in interest rates, but the intermarket evidence from our bond market ratios supports this action and indicates a healthy degree of risk appetite. 

Today we're going to highlight one of those bond market ratios – high-yield vs. investment-grade debt.

Let’s take a look.

Here’s an overlay chart of the US 10-year yield and the junk versus investment-grade...

This is our ASC Research Q2 2022 Playbook.

With the current market environment giving us many mixed messages, what better time to dive in and see what's happening underneath the surface?

• Stocks (International & U.S.)
• U.S. Sectors & Industries
• Market Breadth & Sentiment
• Commodities
• Currencies
• Intermarket Analysis
• Cryptocurrencies
• New Trade Ideas
• Overall Strategy

From the desk of Louis Sykes @haumicharts

If you've ever been deep in the trenches slinging cryptocurrencies, chances are you're well aware of the infamous liquidation cascade.

For some traders, the thought will send shivers down their backs.

To others, it represents one of the most profitable asymmetries in supply and demand.

The Chicago Mercantile Exchange (CME) is the largest and most sophisticated derivatives exchange for several traditional financial instruments and Bitcoin futures contracts. But there are stringent rules bounding these contracts:

• Each contract is 5 BTC (currently just over $200,000).
• The market is only open Monday through Friday.
• Clients tend to have a good relationship with a broker that's allowed to trade on the CME.

These rules are essentially a risk-mitigation strategy.

In the case of liquidations, if the account reaches negative equity before the liquidation is finished, the trader is liable for the negative amount.

Further, failure to pay this would result in a bankruptcy proceeding, which the broker has to...

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'll publish this...

For this week's trade, buying $XLI January 130 calls for 35 cents or cheaper.

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