From the desk of Willie Delwiche.

Key Takeaway: A healthy level of optimism ushers investors into the holiday season. But lofty expectations are neither reflected in price nor supported by breadth. Participation is struggling to expand beneath the surface and cyclical areas of the market are retesting critical levels of support. A narrow rally running on empty leaves the market vulnerable to disappointment and could challenge  high spirits. The question becomes how patient will investors be, especially since consumer sentiment is in the dumps. If the fish aren’t biting, some may prefer to cut bait.

Sentiment Report Chart of the Week: Consumers Are Cranky

The latest data from the University of Michigan shows consumers are in a pretty bad mood. The Consumer Sentiment Index for November is at its lowest level in a decade. While the expansion in the number of stocks hitting new lows probably doesn’t help, this seems to reflect political divisions and partisan divides more than than an actual economic...

Given an opportunity, JC will gladly talk your ear off about proper wine pairings for your Thanksgiving meals. No matter your flavor or preference, JC can find something that works. After all, he did get his sommeliers certification.

During this morning's analyst meeting, we were discussing what trade we wanted to put on today and we had two great ideas. We debated the merits of each, and we couldn't decide which one we liked best right now.

Stock 1 or Stock 2?

Bills or Dolphins?

Gators or Hurricanes?

Cats or Dogs?

And then in typical JC fashion he said:

Why not both?

And my response was: "Of course! Why not? We'll call it a Thanksgiving Pairing!"

So here we are.

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 Wednesday December 1st @ 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 Wednesday evening:

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

At the beginning of the month, we pointed out the disconnect between risk assets and the currency market. 

Stocks up and down the cap scale were breaking out to new highs and energy futures were resolving higher from multi-year bases -- all while emerging-market and commodity-centric currencies approached year-to-date lows.

Something wasn’t right. 

We’d expect these risk-on currencies to catch higher given their strong correlation with other risk assets. But this hasn’t been the case. In fact, seeing as currency markets had been out of sync with other asset classes for months, we really didn’t want to overthink this development.

But what appeared to be another mixed intermarket signal proved a valuable warning.

Fast-forward to today and the weakness that was evident among emerging-market currencies is spreading to stocks and commodities. Small-caps and crude oil are retesting critical breakout levels, and cyclical stocks are failing to sustain their recent moves.

In...

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...

From the desk of Steve Strazza @Sstrazza

Welcome to our latest “Minor Leaguers” report.

We’ve already had some great trades come out of this small-cap-focused column since we launched it late last year 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 about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but it’s time we branch out a bit and allow some new stocks to find their way onto our list.

The way we’re doing 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...

It's still not all that pretty out there underneath the surface.

But new all-time highs in the S&P500 is probably not something we should ignore.

History has taught us that when we see that, there are usually more new all-time highs coming shortly after that. And then after that again....

On this episode of Pardon The Price Action, we talk about whether these are all retests or failed breakouts.

That's the big question.

Full video below or Listen to the podcast version.

With Oil testing 76, Financials and Industrials retesting former highs, small-caps and even Bitcoin near critical levels, we want to know if this is just a pause, or the beginning of the end.

All this and so much more on the latest episode Pardon the Price Action!

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 Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 100 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 100 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 high, which is when new 52-week...

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

We’ve pounded the table on the weakness in energy these past few days, so why stop now? When we find ourselves hammering the same topic time and again, there’s usually a very good reason.

As far as energy goes, there’s been a lot of damage done to the space this week.

Breadth fell off a cliff and was not supporting the new highs for energy stocks.

The relative trends have gotten clobbered, as energy has been among the worst-performing sectors over the near term.

And, just today, we’re seeing failed breakouts in energy sector ETFs across the board.

Since we’ve already written about these themes, let’s dive in and see what energy futures themselves have to say about the situation.

Are futures resilient despite these bearish developments? 

Or are there cautionary signs in the commodities market that are confirming the weakness in the stock market?

Let’s find out.

...

From the desk of Steve Strazza @Sstrazza

Energy has been by far the best-performing sector over the trailing 12-month period.

In October, we witnessed a handful of energy stocks and industry ETFs break higher from bases and reclaim their summer highs.

Without a doubt, these are bullish developments for the space. 

But over the trailing month, energy has lost that leadership position and has actually been the worst-performing sector in the market. 

Today, we’re seeing a lot of the upside resolutions from last month undercut their former highs and turn into failed breakouts.

So, where do we go from here?

When we look at the relative trends in the energy sector, we get a much different picture than what we’re seeing on absolute terms. Most of them never resolved higher like their absolute trends and simply remain messy, with prices stalling at the upper bounds of their basing patterns.

If we’re going to see sustained outperformance from energy stocks, we need to see them resolve higher relative to the broader market.