The latest Follow the Flow report is out, and as always there is a play therein that caught my attention.

It's a bullish idea, but I'm going to play this one in a unique way in order to hedge myself a bit in a tape that feels a little sluggish at the moment. I want to get paid to wait out the slow times we're likely to "enjoy" from now until Labor Day weekend, and possibly beyond. So this will involve a calendar spread, but with a twist...

From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return 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 to profit in the weeks and months ahead.

We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

We've been pretty obnoxious about our position that markets are a total mess these days. While this remains the case, we've seen some positive developments play out lately... particularly the renewed strength from cyclicals and offensive assets.

We've covered the best evidence from both the bulls and bears camp in recent months, and even played devil's advocate with the data we...

As market participants, we have to keep an open mind and remain nimble as new data comes in.

There's nothing wrong with flipping our approach as the weight of the evidence shifts. In fact, we pride ourselves on never being dogmatic and always keeping an objective lens on the market.

Sometimes it's irresponsible to not be aggressive in our positioning, while at others, there's nothing wrong with sitting on our hands and waiting for new data to come in.

And that's precisely where we stand with Bitcoin right now.

With prices pushing up against support from February and April, we're anticipating some form corrective action from this impressive rally at this pretty logical level of overhead supply.

How long will this former support act as resistance?

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

The US Dollar Index $DXY has been a good reminder that price doesn’t always move in a straight line. 

Paul Tudor Jones has been quoted saying “markets only trend about 15% of the time.” The textbooks will tell you it’s somewhere between 20% and 30%. But it all comes down to how you’re measuring it.

We think it’s fair to say most markets trend about 25% of the time on a structural basis.

And the present year two market conditions have been a great illustration of what they look like the other 75% of the time… range-bound... sideways... a hot mess.

Speaking of which, last week, we pointed out that Dollar strength had stalled and that things were beginning to look messy on shorter time frames. 

Many of the long USD trade setups we laid out in late June have yet to break out and are currently testing their...

From the desk of Willie Delwiche.

The overall weight of evidence continues to argue for caution and we have yet to see a decisive shift toward a risk-on environment. But we have made some changes to our dynamic portfolios to stay in harmony with the shifting trends within the equity market.

In the Cyclical portfolio we’ve thrown in the towel on our Energy sector exposure and are positioning to benefit from the resumption of the uptrend on bond yields. Financials and other cyclical value areas appear poised for another round of leadership.

In the Tactical Opportunity portfolio we are putting some of our cash to work (though continue to have a healthy amount on the sidelines - remember cash is an asset class). We are adding to strength within our domestic equity exposure and see an opportunity to add global exposure at a time when many foreign ETF have already been struggling with overhead supply. 

Have you ever watched the "did you see the gorilla" video?

Viewers are asked to count how many times basketball players wearing white shirts passed a ball while someone in a gorilla suit walks into the middle of the scene, thumps their chest, and walks off.

Despite looking straight at the gorilla, over half of the people who watch the video completely miss it.

It's a hilarious showcase of how we can often miss what's right in front of our very own eyes. Psychologists call it inattentional blindness, and it's a very real thing.

People are always trying to find a narrative about why the market's behaving as it is. This is arguably more prevalent in crypto, where people base their investment decisions on stories of a new "global currency", or god forbid the arguments of Bitcoin being a "better store of value."

But in occupying ourselves with all these stories, we can often miss what's right in front of us.

Nothing beats simply looking at all 3000 stocks in the Russell 3000 to get a gauge of where the stock market lies, for instance. Of course...

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...

Key Takeaway: Bond yields ready to move higher. Trends are still rising and inflation is proving persistent rather than transitory. Financials have been resilient but look for Growth to struggle if bond yields rise.

• Financials have quietly maintained a spot in the sector leadership group based on our relative strength rankings. They have been in the leadership group since November and have been the top-performing sector over the past year.
• The discrepancy in between the cap-weighted and equal-weighted rankings for the Discretionary and Communication Services sector puts on display the impact a handful of mega-caps can have on sectors (and indexes). Without the impact of FB and GOOGL, Communication Services would be one from the bottom rather than one from the top. The inverse is true with respect to Consumer Discretionary and AMZN.

The market has spoken.

You might have your conspiracy theories about market manipulation or inflation or whatever story they're telling these days.

But it's only the price that pays. We just want to sell things at higher prices than where we buy them.

And you're going to have a hard time finding a worse investment over the past year than Precious Metals.

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 August 6, 2021. This report is published bi-weekly and rotated on-and-off 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.

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

...

From the desk of Steve Strazza @Sstrazza

Our Top 10 report was just published. In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

These are some of the most important charts in the world right now in our view. If the global stock market is going to have the juice for another real leg higher, then we need to see the rest of the world participate. US Large-Cap Growth stocks have carried the baton and pushed the S&P to new heights, while many major diversified world indexes have consolidated. In fact, many of these countries and indexes have gone absolutely nowhere since February (they look just like small-caps).

But there isn’t just some overhead supply at these former highs from earlier in the year. There are dead bodies buried just above current levels where prices peaked prior to the financial crisis. Markets have memory. Polarity is real. We see it every day. It’s no coincidence that these stocks just stopped at the very same level they did back in 2007. And it also won’t be any real surprise to see them blast...

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the context of the big picture and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

• Our Macro universe performance was mixed again this week as only 55% of our list closed higher with a median return of 0.38%.
• The biggest winner of the week was the 10-Year Yield $TNX which gained 4.12%.
• Meanwhile, this week's biggest laggard was the VIX index $VIX, with a massive loss of -11.46%.
  • Higher rates and suppressed volatility support the new risk-on tone we've seen markets exude in recent weeks.
  ...

Today we're going to take a look at a long setup in the Chemicals space.

Let's take a look at this name.

The strength coming out of crypto in recent weeks has been impressive, and for the first time in many months, we can say that the bulls are in the driving seat.

The median change for all coins above $1B in market-cap in just the last 20 days, since Bitcoin bottomed, is a whopping 53%! In this same period, nearly 100,000 Bitcoin have been withdrawn from exchanges, and many more hundreds of millions of dollars committed to short positions were liquidated as the accumulation for these digital assets has ramped up.

Even the crypto stocks are showing strength.

Long story short, the cryptocurrency landscape looks the best it has in a long while, and we're subsequently looking for more names to express this bullish thesis of ours.

First, we'll address the elephant in the room, Bitcoin. After successfully resolving higher from this critical 41,000 level, prices find themselves pushed up against their next hurdle - the 261....

"JC, Technical Analysis is just a Self-fulfilling Prophecy"

Where do I even start...

I just can't with this one.

A statement that technical analysis is self-fulfilling is suggesting that there are events in the free market that are caused directly or indirectly by the preceding prediction or expectation that it was going to occur by a group of market technicians.

Seriously?

Is Bill Gates sticking chips in our arms too?

Is the Earth Flat?

We retired our "Five Bull Market Barometers" in mid-July last year to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

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.

The talk around town this week is the potential "double bottom" in US Interest Rates. 

You can see that here along with the higher low in the highly correlated Regional Bank stocks:

Is the resiliency in Copper pointing to higher rates?

You can see Copper relative to Gold here and how closely the ratio moves with rates:

The strength in Copper and other base metals is impressive. We dove into it on this week's Live Strategy Session along with our favorite Steel Stocks to take advantage of these trends.

But it's the weakness in Gold that really stands out. No one wants...

I only live about an hour from New York City, but it was my first time back since March 2020. It felt good.

Manhattan had been my home for over a decade before I moved to California in 2015. I've been back on the East coast now for about a year and a half, but haven't been able to enjoy NYC for obvious reasons.

It was good being back. The sushi there is on another level. You don't get that sort of thing in the suburbs.

Anyway, I dropped by to see my friends at Ritholtz Wealth Management to talk all things markets, technical analysis, finding the strongest stocks and how the Heat & Knicks did in the offseason.

You can check out the complete podcast episode here, or watch some of the highlights in the video below:

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

Breakouts continue to emerge left and right within the commodity space as participation expands to more and more subgroups. 

One of the areas that’s had our attention lately is Livestock. Last month, we highlighted lean hogs. 

And while they’ve since fallen back below our risk level, we’re now seeing cattle futures attempt to break higher from a similar base.

Let’s dive in and outline some long setups in these livestock futures as they’re offering a favorable risk/reward at current levels...

First up is a weekly continuation chart of Feeder Cattle futures:   

We can’t ignore this 5-year base as buyers finally appear to be taking control after a handful of tests at these former highs dating back to 2016.

As the old saying goes…  

The more times a level...