In today’s Daily Digest, we’ll review the following:

1. New position in TLT.
2. No adjustments are needed today.
3. Closed XLV (loss) and USO (profit).
4. Current status of open campaigns.
5. Volatility Snapshot.

Let’s dig in!

Today's insider action starts with a bold move at J.B. Hunt $JBHT, where director James Robo disclosed a purchase of nearly $10 million.

RA Capital Management reported an original 13D showing a 23.7% stake in Sionna Therapeutics $SION. 

The biotech-focused hedge fund has a strong track record in early-stage investments, making this one to watch.

Among its largest holdings are Ascendis Pharma $ASND, Vaxcyte $PCVX, and Janux Therapeutics $JANX.

Here’s The Hot Corner, with data from February 18, 2025:

Meanwhile, Pinetree Capital Ltd just filed a Form 4 for TruBridge $TBRG, totaling more than $3 million.

Last but not least, Farallon Capital Partners made moves in both Aramark $ARMK and New York Times $NYT, raising its ownership to above 5% in each.

Constellation Energy $CEG just released another blockbuster earnings report.

The company exceeded the top end of its guidance range for the second consecutive year.

In addition, they are returning money to shareholders at a rapid clip. Last year, they repurchased $1B in common stock.

Moreover, CEG increased the annual dividend by 25% last year and plans to grow the dividend by another 10% this year.

For the 11th consecutive year, they were the United States' largest producer of emissions-free energy. 

It's safe to say that Constellation is the Nvidia of "AI Utilities." It's a fantastic company!

Let's talk about what else happened 👇

*click the image to enlarge it

As you can see, Entergy had the best earnings reaction on Tuesday, and Medtronic had the worst. 

Constellation Energy was the largest company to report. It reported mixed results and rallied 2.6% with a reaction score of 0.3. It was muted.

Now, let's dig into the data and talk about some of the best and worst earnings reactions 👇

Today's number is... 587

With the S&P 500 index reaching a new all-time high yesterday, this current bull market has persisted for the past 587 trading days.

How much longer can this run continue? 

Here is the table:

Let's break down what this table shows:

• The green box represents all of the bull markets dating back to 1950. A bull market is defined as a rally of 20% or more that follows a drop of 20% or more.
• The red box represents all of the bear markets since 1950. A bear market is defined as a drop of 20% or more that follows a rally of 20% or more.

The Takeaway: There is nothing more bullish than hitting all-time highs.

Yesterday's all-time high marks the second all-time high for the S&P 500 index in 2025. Over the last 587 trading days, this bull market has delivered a remarkable return of 71.4%. However, it’s important to note that the average bull market lasts around 1,138 trading days and typically achieves a return of 153%. Consequently, this bull market, while strong, is still below the...

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.

...

I'm in the UK visiting my sister for a couple weeks, and I have to tell you—I love it here.

The vibes, the peace, and the sense of adventure just hit different. It never gets old to visit Europe. There are so many incredible places, rich with history and culture, all packed close together.

But for me, it's hard not to think about how these European indexes are moving lately.

They’re all ripping. 

From the all-time highs in Germany and the UK to big structural trend reversals in Italy, Spain, and Greece, investors are embracing risk, and it's showing up across the board.

Unlike in the U.S., where tech dominates, these European indexes are built differently. They have a ton of financials, industrials, and even utilities. That’s just how it works here.

...

...and that's precisely why I love it.

While me and the All Star Charts gang have been pounding the table on China for several weeks now, it is still a mostly hated and certainly misunderstood trend. But that's mostly because people are reading the political headlines and ignoring the only thing that doesn't lie to us -- price.

So I'm putting on a trade that might take some heat, and I'm in it to win it.

In today’s Daily Digest, we’ll review the following:

1. No new positions today.
2. Rolled IGV position to April options.
3. Closed XLE (loss) and XLI (profit).
4. Current status of open campaigns.
5. Volatility Snapshot.

Let’s dig in!

Starbucks' new CEO is getting the company back on track, heading for all-time-highs.

Today’s most significant insider transaction comes via a 13G filing by SoftBank, which reported a fresh 8% stake in Alibaba $BABA.

This marks a notable shift in SoftBank's strategy after it nearly unloaded its entire BABA position last year.

Given the timing and size of the purchase, we’re treating it as a “new position.” And such fresh bets are always worth noting.

Director John Cote filed a Form 4 revealing a purchase of roughly $10 million in CompoSecure Inc $CMPO.

Here’s The Hot Corner, with data from February 14, 2025:

Broadwood Partners L.P. filed a Form 4 showing a $6.27 million purchase in Staar Surgical Co $STAA.

Last but not least, Rep. Michael McCaul of Texas reported a purchase worth between $100,000 and $250,000 in Humana Inc $HUM.

Airbnb $ABNB had its best day ever on Friday after it reported a double beat and raised its guidance the night before. 

It was a fabulous report.

Not only are they growing top-line at 12% Y/Y, but the company is a free cash flow machine. 

The company's free cash flow margin is 40%, which enables it to repurchase nearly $1B worth of common stock each quarter.

It's a share cannibal.

In addition, ABNB is investing $250M in launching and scaling new businesses this year. 

The management team isn't satisfied with their current market share. They want MORE!

The market loves their attitude, and the stock has been rewarded accordingly.

Let's talk about what else happened 👇

*click the image to enlarge it

As you can see, Airbnb had the best earnings reaction on Friday, and Godaddy had the worst.

Applied Materials was the largest company to report. It reported a double beat but fell 8.2% with a reaction score of -3.6. 

Now, let's dig into the data and talk about some of the best and worst earnings reactions...

Today's number is... 86%

The percentage of world markets above their 50-day moving average has surged to 86%. But how strong are these trends?

Here’s the chart:

Let's break down what the chart shows:

• The black line shows the percentage of world markets above their 50-day average.
• The red line shows the percentage of world markets that have a 50-day average greater than their 200-day average. 

The Takeaway: The key development here is that global breadth is improving, which is typically supportive of US stocks. Currently, the percentage of world markets above their 50-day moving average has reached its highest level since September of last year. This recent increase in global breadth readings suggests that the underlying short-term strength in the market is healthy, potentially presenting short-term opportunities. 

While this is a promising starting point for world markets, the overall trend strength of most world markets remains weak. To clarify how I identify a strong uptrend: is when the 50-day moving average is above the...

Something we've noted in recent weeks is how the United States is falling down the list. Unsuspectedly, we think this is actually rather bullish.

This is because American equities aren't weak - quite the opposite! They're trading at all time highs.

Instead, we're seeing more countries beginning to participate. This points to a growing number of opportunities forming outside the United States; this widening of global breadth is bullish from a macro perspective and suggests this is a global trend, not just a domestic one.

Quantifying this, while the US is still in the top half of the power rankings table, its position has been falling for many weeks now.

Does the US fall into that red zone?

We'd love to hear your thoughts on this one. Reach out if you have any thoughts.

Stocks are at all time highs.

...

The same industry groups are continuing to lead, as pictured by the big block of green on our table. This once again points to the efficacy of erring on the side of relative strength; when an ETF flips green it has a tendency to stay green.

Interestingly, silver and gold miners have migrated higher on the table.

Zooming out, Silver looks to be completing a long-term breakout and catching higher to Gold.

This is clearly a significant tailwind for these ETFs.

In true commodity supercycles, shiny yellow rocks outperform stocks.

Last week, we outlined why we thought buying gold and selling stocks was a good idea. If you haven't had a chance, you can check out that post.

But that's not it.

We've also been pounding the table on how bullish we are on the precious metal mining stocks. They're testing a key level of polarity relative to gold futures. 

This is the level where the miners begin to outperform gold.

We're also heading into the sweet spot for junior gold mining stocks based on seasonality. 

If you trade options, you know that expiration day can be a wild ride. Some trades go exactly as planned, while others take an unexpected turn—like waking up to an assignment you weren’t expecting.

This week, regular February Monthly options expire. I'm often asked about what happens to my positions or portfolio if I'm holding something that is expiring.

So, what actually happens when your options expire? Whether you’re holding long calls, short puts, or an iron condor, understanding assignment, settlement, and pin risk can save you from some unpleasant surprises. Let’s break it down.

What Happens When an Option Expires

When options hit expiration, a few things can happen:

• If they’re out of the money (OTM) → They expire worthless. No harm, no foul.

• If they’re in the money (ITM) → They’re usually exercised or assigned.

• If they’re right at the strike price → Things can get interesting (we’ll talk about pin risk in a bit).

Most brokers will automatically exercise an option if it’s at least $0.01 in the money...

As more stocks, more sectors and more countries around the world start to participate in this bull market, any of the short sellers who overstayed their welcome are getting blown up.

Good.

This is a classic characteristic of healthy bull market environments. I would encourage you to go back and study every bull market ever. You'll find that investors who own stocks are much more profitable than those who are selling stocks.

It's just math.

Here's the thing about short sellers that I think gets forgotten. Short sellers are guaranteed future buyers. Longs are only promising to be future sellers. 

The thing is that when shorts are getting squeezed, these can become forced liquidations. And margin clerks don't use limit orders. They'll spray the market, and it will crush you if you're on the wrong side of that.

But if you're on the right side - pay day!

Here is a list of stocks where short sellers are the most vulnerable to get blown up:

The list begins with names that have a high short interest. Then we look at the ones where the number of shares short are exponentially greater...

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the two weeks ended January 3, 2025. This report is published bi-weekly, in rotation with The Minor Leaguers.

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.

Click here for a behind-the-scenes look at our process.

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

Today's number is... 38.8

Bearish market sentiment continues to rise, with our Average Bears indicator reaching 38.8 last week. Meanwhile, the S&P 500 index achieved a weekly all-time high... Things that make you go, hmmm.

Here’s the chart:

Let's break down what the chart shows:

• The blue line in the top panel represents the price of the S&P 500 index.
• The light red line in the middle panel shows the S&P 500 index 52-week drawdown.
• The dark red line in the bottom panel shows the average bears from the Investors Intelligence (II) and the American Association of Individual Investors (AAII).

The Takeaway: An increasing number of bears have entered the market, this is illustrated by our average bear indicator, which has risen to its highest level since March 2023. Typically, when we see this many bears in the stock market, we are somewhere in the midst of a market drawdown. However, by the close of trading on Friday, the S&P 500 index finished the week at new all-time highs. 

...