From the desk of Steve Strazza @Sstrazza

In a further effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."

We write a post every other week where we outline some of our favorite setups from the watchlist.

We've already had some great trades from this universe and couldn't be happier about the early feedback.

Moving forward, we'll be rotating this column with "Under The Hood" each week.

In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort the stocks by their percentage from new highs. Easy done.

From the desk of Steve Strazza @Sstrazza

As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.

Different market environments, naturally, are more conducive to certain scans and less so to others.

For example, running our "Short Scan" right now is an absolute waste of time (which in itself is information about the current state of the market). On the other hand, our "Minor Leaguers" is perfect for the current environment due to its focus on Small-Cap stocks.

Our "Squeeze Scan" is also absolute gold for the current market. While Gamestop $GME is stealing all the thunder these days, it's not the only stock being propelled higher by short covering. It's happening more or less across the board in the most shorted names.

In fact, if you were to treat these hated stocks as a basket, they'd be outperforming even the strongest industry groups right now.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

The market is giving us absolutely no reason to play defense right now.

Regardless of the asset class, it's the risk-takers that are having their way in this environment.

Investors stretching out along the risk spectrum is a point we've been hammering home for some time now, particularly in our weekly RPP Reports - like this one.

Not only is this true on absolute terms, but we're also witnessing cross-asset relationships progress higher and in favor of risk-asset which can only be taken as a positive.

It's not often we see all asset classes in agreement with each other, but when we do, it's a significant driving force that supports the risk-on trade and suggests higher prices to come.

From the desk of Steve Strazza @sstrazza

Our most recent Under The Hood report was packed with a handful of buying opportunities. As usual, these names are all exhibiting bullish relative strength and offering investors well-defined risk levels to trade against... and of course, reward profiles skewed heavily in our favor.

In an environment like this one... where areas far and wide are making new highs, and even the weakest corners of the market are participating, there is no shortage of strong stocks floating to the top of our bottoms-up scans.

In recent months, this column (as well as the Minor Leaguers) has been dominated by smaller-cap names as SMIDs and Micro-Caps have been where all the buzz is among investors these days due to their aggressive outperformance.

Makes sense, right?

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

From the desk of Steve Strazza @Sstrazza

We updated our Breadth chartbook a few days ago which Premium Members can check out here.

There are literally hundreds of charts with various breadth indicators from new high/low and overbought/oversold percentages to A/D lines, and more for not only the major averages and indexes but also each Large-Cap Sector SPDR.

What's this month's takeaway after spending a morning digging through our expanded workbook (that's right, there's more)?

Market internals continue to be a tailwind for stocks as we saw an improvement in the vast majority of our metrics again this month.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

We continue to experience a bullish expansion in participation from stock markets around the world.

Just a few days ago we discussed buying Israeli stocks and explained how their strength at the index level was being driven by their heavy exposure to Technology.

Mega-Cap Growth and Tech stocks (we're including Communications and Discretionary here -- "Tech but not Tech" names such as Alibaba, Tencent, Meituan, JD.Com, etc.) are also a dominant market force in China.

We wrote about this exact topic in November, and how strength from these names would likely continue to propel these Large-Cap Chinese Indexes and ETFs higher. The Chinese Tech ETF $CQQQ and iShares Large-Cap China ETF $FXI tacked on an additional 24% and 12%, respectively in the time since.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

Last week's Mystery Chart was the Israeli Tel Aviv 125 Index zoomed all the way back to the start of this century.

You might be wondering why we're discussing Israeli equities of all things...

The short answer: They're making new all-time highs.

In this post, we explore the sector that is mainly responsible for these gains, dive into its strongest components, and outline some long ideas with risk/reward setups skewed in our favor.

Not only is this yet another group of stocks we can use to express our bullish thesis on risk assets -- it is also excellent information. Once again, we're seeing another development pointing to the increasing participation and improving breadth across international equity markets.

This move in Israeli equities also fits into a larger theme that is taking place beneath the surface for stocks all around the world. It's difficult to overstate the significance of these moves.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.

As we discussed in last week's report, bears have a lot of work cut out for them.

With all this rotation into offensive groups and cyclical areas of the market, they are really running out of talking points. We literally can't find a meaningful group of stocks in the US or even abroad that we would want to short at this point.

This is excellent information as it's not something we can say very often... and it's bullish, just to be clear.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our “latest Under The Hood” column for the week ending January 25, 2021. As a reminder, this column will be published bi-weekly moving forward, and rotated on-and-off with our new Minor Leaguers column.

In this column, we 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.

Whether we’re measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers… there is a lot of overlap.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

New Mystery Chart!

For those new to this exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching in order to profit in the weeks and months ahead.

As we mentioned last week, the weight of the evidence overwhelmingly lies in favor of the bulls.

We're seeing rotation supporting this move higher in equities; a sustained bid for SMIDs and Micro-Caps while Large-Cap indexes slowly work higher is all very constructive for the early innings of bull markets.

This environment is also providing bulls with an increasingly wide selection of areas to allocate capital - from Industrials, Technology, and Cylicals, and now Financials.