From the desk of Willie Delwiche.

Key Takeaways:

• New highs are not expanding, but neither are new lows
• Housing costs fuel inflation but bonds are unconcerned
• Risk on/risk off in neutral but broker dealers threaten break down

As 2021 began, the strong trends that emerged in 2020 were intact. But as we get ready to make the turn to the second half, we find ourselves looking at a muddled mess of stalled out trends and conflicting signals. How these resolve will go a long way toward dictating the paths that the market and the economy take over the second half of the year. 

The NASDAQ and S&P 500 have continued their foray into record territory, but find themselves without much support. Take this week for example. New highs in the indexes on Monday & Tuesday came with a continued contraction in NYSE & NASDAQ new highs and more stocks declining than advancing on the S&P 500. The lack of strength has been...

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So, let us know what it is… Buy, Sell, or Do Nothing?

Whether you know it or not, we're all exposed to risk from the financials sector (think big banks, GE, etc).

And when I look across the positions in my portfolio, I have significant open exposure on the long side of the market.

This is top of mind for me right now, coming out of our weekly team call. The recent sloppy market action, with no real expansion of new highs, is opening the door -- if ever so slightly -- for the bull market doubts to creep in. We are certainly not making a "Top" call here by any means, but we are observing that the risks of a potential correction appear to be increasing.

So, while we don't need to get aggressive with short bets here, it might be prudent to start exploring some bearish setups and keep our eyes and minds open for opportunities to get tactically short in names and sectors that would likely lead on the downside if the broader markets were to stumble here. And we can do this without exposing our portfolio to too much risk, thanks to the existence of long exposure already on the books.

We debuted a new scan recently which goes by the name- All Star Momentum.

All Star Momentum is a brand new scan that pinpoints the very best stocks in the market. This time around, we have incorporated our stock universe of Nifty 500 as the base. Among the 500 stocks that we follow, this scan will pump out names that are most likely to generate great returns.

While we go through our lists of sectors and stocks on a weekly basis, we thought of launching a product that would highlight the names that are the strongest performers in our universe and those that are primed for an explosive move.

Just like The Outperformers scan, this is a list of stocks belonging to the sectors that display relative strength in the market at any given point in time. Since sector rotation is the lifeblood of a bull market, we will be ahead of the curve before the gears keep shifting.

There's more noise in the crypto space than arguably any other major asset class on Earth.

The sheer amount of people throwing around chart crimes, shilling bags, and stirring the proverbial pot is unheard of.

Human instincts have really been put on a pedestal throughout this entire cryptocurrency experiment. As Ian McMillan eloquently summarized on the podcast earlier this week, this entire space is the perfect microcosm of human behavior in public markets.

With all this chaos, we need a map that guides us to where to go, and what to avoid.

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

We’ve been pounding the table about the broad-based strength from the US Dollar since earlier this month. Due to the momentum of its recent move, we believe this rally could have legs beyond just the near-term... But we'll address that when the time comes.

For now, we're positioned to take advantage of this swift rebound from the Dollar through a handful of USD crosses currently offering favorable risk/rewards. 

Though the Dollar gave some of this month's gains back last week, our short-term outlook remains higher. As I write this, many G-10 currencies like the Euro, Pound, Aussie, and Canadian Dollar are all rolling over relative to USD. 

We’ll be revisiting this theme plenty as it plays out over the coming weeks to months.

But in the meantime let’s focus on a currency pair that’s bucking the trend, the US Dollar-Brazilian Real $USD/$BRL.

Here’s a weekly bar chart of USD/BRL...

From the desk of Willie Delwiche.

Key takeaway: Even with some indicators backing away from extreme optimism, sentiment remains on the risk side of the scale. Optimism can be slow to unwind as hopeful investors typically hold on until price changes force their hand and compel action. Optimism fades slowly and then all at once (whereas, fear, when it emerges, spikes quickly, and then slowly fades). The decline in consensus bulls and the emerging  pattern of equity market exposure among active managers echoes a waning in risk appetite that can be seen in equity and options market trading volume. Longer-term sentiment indicators continue to point to an elevated risk environment. 

Sentiment Report Chart of the Week: “Less is More”

Our risk-on and risk-off indexes highlight the indecision that the current market environment embodies. Both indexes continue to chop sideways while optimism lingers at elevated levels and bears are nowhere to be...

It's shakeout city in the world of Cryptocurrencies right now.

Failed breakdowns. Bull hooks. Bear traps. Call them what you will, as it's not the nomenclature that matters, but instead the mechanics of these formations which often result in swift moves in the opposite direction...

We've already discussed a handful of these patterns since last week, but this is such a prevalent theme right now that we want to get downright obnoxious about it.

And these failed breakdowns aren't just taking place denominated in US Dollars, but we're also seeing this exact behavior in coins relative to Bitcoin.

So today, let's build on what we discussed yesterday.

I was taught early in my career to never fight Papa Dow.

You know what I used to do all the time early in my career? I would constantly be fighting Papa Dow.

"It's only 30 stocks", I would argue.

"It's a global market", is what I would say.

Guess what?

Never fight Papa Dow.

Thanks Ralph

The Dow Jones Industrial Average is the world's most important stock market index, followed by the Dow Jones Transportation Average.

Here's an old post about how the Dow is underrated.

Anyway, fast forward to today and we have the Dow Industrials hitting our upside objectives in early May:

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. But it is what it is, and we can only play the hand we're dealt. 

You can try picking profits out of a trendless environment but at the end of the day, most investors are better off on the sidelines. Imposing one's will upon the market is rarely a winning strategy. We'd rather trade what's in front of us. 

We've covered the best evidence from both the bulls and...

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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...

Key Takeaway: Indexes made new highs last week, but rally participation has been lackluster. Faltering industry groups and global market trends can make index-level advances short-lived. New breadth thrusts or an Emerging Markets-led rally would suggest downside risks are subsiding.

• The Energy sector reclaimed the top spot in the rankings this week, followed by Communications Services (down one spot from last week) and Real Estate (up one spot from last week). 
• Industrials and Materials have dropped out of the leadership group (which is based on rankings over a three-week span) over the past two weeks. Technology and Communication Services have joined Energy, Financials, and Real Estate in the leadership group.

I've always wondered -- can publicly traded advisory and consulting services recommend the purchase of their own stock to their clients? There's probably a rule against this. Certainly, it would be in an ethical gray area.

That's too bad, because the ASC team recently surfaced a $20B market research and advisory group stock during their research and the chart looks like a fantastic setup.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest "Under The Hood” column for the week ended June 27, 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.

Whether we’re measuring increasing interest based on large institutional purchases,...

Another messy weekend of price action for these Cryptos...

We sound like a broken record at this point, but 30,000 for Bitcoin is the level to watch right now.

This weekend's low was now the 5th time buyers defended this critical level of support:

Honestly, very little is currently moving up in commodities. For quite some time now we've been updating our stance on the commodity cycle and what we think of it. But over the past few months, the market has been messy, to say the least. In this kind of a mess, I find myself questioning the move in the base metals and precious metals pretty often. And while we haven't gotten any confirmation on that front, the confusion persists.

So then, what are we talking about here today? Let's take a look inside!

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 returned with strength this week as over 79% of our list closed higher with a median return of 1.97%.
  • Many US stock market indexes made new all-time highs, including the S&P 500 $SPY and Nasdaq 100 $QQQ.
  • 72% of the assets on our macro list are within 5% of their 52-week highs, and 23% made new 52-week highs during the week.
  • Frontier...

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.

Energy Futures Turn On The Heat

Crude Oil broke above resistance at its 2019 highs back in June and has been grinding higher ever since despite its energy-related peers remaining beneath their corresponding resistance levels. That changed this week as Heating Oil and Gasoline finally broke out to new multi-year highs. The recent strength from this group comes as base metals continue to correct through time and price. This kind of rotation within the commodities complex is constructive, especially after such a strong run-up off last year’s lows. We think Energy is offering some excellent risk/reward opportunities right now as we’re not only seeing other commodities contracts confirm the price action in Crude, but Energy stocks are also breaking out to new highs (see Chart #5). 

As for Gasoline, we want to be buyers of this 6-year...

From the desk of Steve Strazza @Sstrazza

We have been adamant about our view that we are in a rather messy environment. For this reason, we've been approaching markets with caution for months now.

Up until earlier this year when risk assets began consolidating in sideways patterns, it had been nothing but blue skies and new highs.

When the weather report is sunny, the water is calm, and the sky is clear, we know the weight of the evidence is with the bulls and we can focus our attention on finding the best opportunities in the strongest areas as ways to express our thesis.

But that's just not where we find ourselves today. The current forecast is cloudy with a chance of rain. And it's already been overcast for months!

And when the outlook is murky, as it is now, we want to take a step back and really weigh the evidence that's in front of us. We need to stay up on incoming data points and monitor how markets react with so many charts currently at key levels of interest.

Luckily, we can use the fact that so many risk assets are at inflection points to our advantage, as each upside or downside resolution will bring us...