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

The middle of the curve is catching higher as the US 10-year Treasury yield pushes toward its next milestone at 2.00%.

Now that we’re starting to see some follow-through to the upside, it raises the question…

Are these new highs in the 10-year sustainable?

With inflation expectations just off their highs, short-term rates surging in the US, and yields ripping higher across the globe, we think the answer is a resounding yes! 

A few weeks ago, we discussed how global yields -- particularly those in developed Europe -- were confirming the new highs for US yields.

Since then, we've only seen this trend accelerate. With central banks turning increasingly hawkish, rates continue to break out to new highs around the world.

Today, we're going to dive further into this theme by taking a look at a handful of benchmark rates outside the US. 

Let’s dive in!

First up is the German 10-year:

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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.

But, now, we’re also highlighting lagging stocks on a recurring basis.

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To quote Steve Strazza: "When commodity stocks go, they go!"

This pretty much sums up the talk we had this morning when coming up with today's trade idea.

We were looking across the strongest sectors and hunting for opportunities to get involved. One challenge we were having is many of the stocks we liked had either already had a big move and we'd be chasing, earnings were on deck in less than a week, or the options chains were too thin for us to get good fills.

Finally, after some searching, we found a name that made sense. And it was one I wasn't familiar with.

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

In April 2020, crude oil traded below zero and marked the perfect capitulation event for a number of trends.

Around the very same time, both commodities and stocks bottomed and kicked off major rallies.

Until recently, commodities had underperformed stocks for about a decade. To make matters worse, they were moving lower on an absolute basis for most of that time as well. 

Not only have commodities started to trend higher on an absolute basis again. They're also undergoing a reversal in their relative trend with stocks and other alternatives.

We’ve been clear about our bullish position as we’ve discussed the potential for a new commodity supercycle for over a year. 

Now, we want to take that thesis one step further as the evidence is building in favor of commodities experiencing a sustained period of outperformance relative to stocks.

To best take advantage of this trend, we want to be overweight commodities and commodity-related stocks.

Let’s...

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

The US dollar can’t catch a bid.

Since briefly reclaiming its November highs last month, it’s been nothing but down and to the right for the US Dollar Index $DXY.

Many global currencies have reacted by catching higher – especially the euro. But commodity-centric currencies – like the Canadian and Australian dollars – have had a more muted reaction. We think that’s likely to change in the coming weeks and months.

With interest rates on the rise around the world and crude oil prices pushing above 90, we think it’s just a matter of time before we begin to see some real strength from these currencies – especially if we see a sustained downtrend in the USD.

Today we’re going to highlight one of these forex pairs, as we think it’s poised for a major move. Let’s talk about the USD/CAD.

Here’s a weekly chart of the USD/CAD cross:

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Music week continues here at Allstarcharts with a little R.E.M. today.

Yesterday we were wondering "What's Going On?", to quote the great Marvin Gaye.

So on today's note, we'll try to answer the question: Is this, in fact, The end of the world as we know it?

And for me, the answer is a big fat NO if these two indexes are above their 2018 highs:

No, not Santa. He already came and went.

JC came to Boulder yesterday (where I Iive) and we were able to get together to enjoy a late dinner. It was a great opportunity to reflect on how far we’ve come and what we’ve already accomplished.

All Star Charts launched about 13 years ago. And we launched All Star Options nearly four years ago.

During this time, we’ve seen big bull runs, panic-inducing corrections, and everything in between.

But the one constant has been

In yesterday's note, we outlined our macro Bitcoin/crypto thesis.

In essence, the market is leaving a considerable oversold zone driven by modestly strong spot flows by whales and institutions.

Now that momentum is back in favor of the bulls on the break of 41,000, we're beginning to deploy our elevated cash positions back into Bitcoin and a variety of trades.

In today's note, we'll discuss a few names we like monitoring for long and short positions and how we're approaching price action from a tactical perspective.

Let's begin by addressing shorter time frame developments.

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...

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest Under the Hood column, where we'll cover all the action for the week ended February 4, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.

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 seeing an unusual increase in investor interest.

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

Whether...

Whenever I'm trying to figure out what's going on, I can't get that Marvin Gaye song out of my head.

But the tl;dr of it is that US large-cap stock indexes are holding support. So far, anyway.

We laid out the key levels a couple weeks back.

But also notice how we've been seeing more strength around the world, with the US acting as one of the laggards. It probably has something to do with all that growth exposure in a lot of US large-cap indexes.

Most other countries don't have that.

Here you can see the Dow Jones Composite Index holding that key 11,200 area. This is a good representation of what we're seeing in a lot of other major indexes and sectors:

This week I had a great conversation with Jeremy Schwartz on the Behind The Markets Podcast on SiriusXM Radio.

Jeremy and I have been through a few cycles throughout our careers and probably understand the weightings of Indexes and ETFs better than most investors. Which was a big point I was trying to make: Understand what you own. You need to know what's inside of these things, and more importantly, what's not.

There's a lot going on in today's market but I tried to really focus in on the primary trends and where I think we're going this year.

Last time we did this I got to go down to the studio at the Wharton School at the University of Pennsylvania. But the weather was bad so we recorded remotely. Hopefully I can make it down there soon and we can do it live from the University once again.

Either way, I think we hit on a bunch of key points on this episode.

Hope you enjoy!