From the desk of Steve Strazza @Sstrazza

How about that volatility!?

I don't know about the rest of you, but days like these make me grateful that I get to do this for a living.

The Nasdaq 100 $QQQ opened the day down over 3% and closed up over 3%. The last time that happened was November of 2008.

How's that for excitement?

Intraday reversals and wide ranges are normal during periods when volatility grips the market the way it has so far this year.

But today was different than the other tumultuous sessions we've encountered in recent months. We're finally seeing some strong evidence of a bottom.

Let's talk about it.

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.

This month marks the one year anniversary of the top in stocks.

And more specifically, I mean the top in the internals of the U.S. Stock Market. Remember, that's the best things were, and it's been a painful deterioration ever since, particularly for most U.S. Index Fund investors, growth investors and most individual U.S. stock pickers.

The new highs list these days is loaded up with ADRs, Metals stocks, Staples and Energy. Most of the other stocks have been struggling. Not all of them are down, but many are sideways at best.

This chart really tells the story of what's been going on. We discussed it on Tuesday night's call:

From the desk of Steve Strazza @Sstrazza

We held our February Mid-Month Conference Call on Tuesday. ASC Premium Members can click here to review the recording and the slide deck.

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

Let’s get right into it!

This is the video recording of the February 2022 Mid-month Conference Call.

Are you betting this trend continues?

Do you think Technology stocks can keep dominating like this, particularly vs Energy?

Most Americans are making that bet.

Look at your typical American portfolios. They own a bunch of Tech and almost no Energy.

The market hasn't been easy off late and a sideways move means that market participants get trapped more often than not. Today we have a trade setup from the Chemicals that has some eyeballs on it. We thought this might be a good time to check it out.

Let's take a look at the trade for this week!

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 18, 2022. This report is published biweekly 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 that are seeing an unusual increase in investor interest.

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.

It's a big world out there.

Our portfolios don't have to revolve around what's happening in silicon valley.

That was maybe a good way to think the past 10 years, but that's a terrible way to think today, and potentially over the next 10 years.

I have no idea. And neither do you. So maybe it will be helpful to try and keep an open mind.

But in the meantime, let's worry about the now.

On this episode of Pardon The Price Action, we continue to see cyclical stocks showing relative strength and popping up on our new highs list.

Are you still stuck in American Growth stocks, or have you moved on?

Metals and Mining stocks are also breaking out to new highs, both in the U.S. and Internationally.

The U.S. is the worst performing country in the Western Hemisphere in 2022. Are you paying attention?

Where do we go from here? What are we buying? What's the next move?

All this and more on this week's episode of Pardon The Price Action.

Check out the full video: