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 In this same period, nearly 100,000 Bitcoin have been withdrawn from exchanges, and many more hundreds of millions of dollars committed to short positions were liquidated as the accumulation for these digital assets has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...

This is the video recording of our August 6, 2021, All Star Charts Crypto Weekly Strategy Session.

From the desk of Willie Delwiche.

It’s said that the most bullish thing stocks can do is go up. If something goes up enough, it starts to make new highs. Indexes like the S&P 500 and the NASDAQ 100, fueled by gains in a handful of mega-cap stocks, have been making new highs but beneath the surface, participation has been relatively narrow. Breaking the S&P 1500 into its component indexes, we see that while still not getting a plethora of new highs (especially at the mid-cap and small-cap level), we have seen some improvement over the past month. Encouraging, but not yet exciting. For that, we want to see new highs eclipse their early June levels (which for the S&P 1500 overall would be in the 200-250 range).

As always, there are a number of interesting investment ideas in the latest 2-to-100 Report published this week.

The one that most caught my eye has seen a recent collapse in options volatility resulting in cheap calls for us to play for an extended breakout. Cheap calls on stocks printing all-time highs are my absolute favorite play to make. So as you can imagine, I'm eager to jump right in.

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

As investors, we have plenty of options.

We can express a bullish or bearish thesis in a variety of different asset classes - from stocks and commodities to bonds and even forex or crypto markets.

But in making the decision of which one of these areas to focus our attention, we must ask ourselves a critical question every now and then...

Where is the best place to allocate our capital?

Money flows to where it is treated best. And that’s always where we want our focus to be.

Remember, we’re here to make money, not fulfill our intellectual curiosities or express our values.

Lucky for us, determining where the alpha is as simple as performing a little intermarket analysis.  

So let’s dive in and do just that.

Earlier this year, when the SPY/TLT ratio hit a key extension level, we knew we were at a logical place for stocks to take a break and bonds to get a shot at taking leadership.

This was a crucial data point supporting our...

From the desk of Steve Strazza @Sstrazza

Dividend aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for 5-9 years.

We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money”. Imagine if years of consistent dividend growth and high momentum & relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

By adding our technical...

This is the video recording of the August 5th Town Hall Meeting w/ Willie Delwiche

08/05/21 2PM ET

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

Let’s flip the script this week and take a more granular approach to our analysis of market internals.

In recent months, we’ve written at length about deteriorating breath. While it’s been our position that the divergences in these indicators are normal following an onslaught of initiation thrusts like the ones we had last year, the lack of participation beneath the surface was drying up to levels that were simply not sustainable.

This lack of confirmation has caused many to question the new highs from the S&P 500 and other major US averages. But, the major averages have masked the pervasive weakness we’ve already been experiencing beneath the surface this year.

In last week’s post, we discussed this weakness in breadth and posed the following question:

Perhaps we’ve already seen the market correct beneath the surface. Maybe that was it…

The major averages are simply not a good representation of what US stocks have been doing for the past 6 months...

With bulls taking control of crypto in the last few weeks, many of the crypto-related equities are showing early signs of life.

Many of these names simply hold Bitcoin on their balance sheet, while for others, the activity taking place in this asset class directly impacts their bottom line.

So it goes without saying that if Bitcoin can sustain a meaningful breakout, it'd serve as a significant tailwind for these names.

Microstrategy is perhaps one of the more direct examples of this thinking, with the CEO taking out hundreds of millions of dollars of debt to add to their growing arsenal of Bitcoin on the company's balance sheet...

On this week's episode of the podcast, I sit down with David Keller to talk about all things behavioral finance. David is one of my favorite guys to talk to about the subject, so I reached out to him and said, "Dave, come on the pod and let's talk about humans".

He happily agreed and so we hit the ground running talking about Anchoring Bias, Loss Aversion, Risk Management, Supply and Demand Dynamics and Market Sentiment.

This wasn't just an academic endeavor. We also discussed current markets, price trends, momentum, breadth and Dave's favorite trade for the rest of 2021.

I think you're really going to enjoy this one. I certainly did!

My entire career I've been told by the old timers that many of their biggest winners have come from Mid-caps.

That always stuck with me, to the point where when we win in mid-caps, it always hits me, "Those guys were right!"

To be clear, the traditional definition of a Mid-cap stock is between $2-10 Billion in Market Capitalization (Market-cap = shares outstanding x price of the stock). 

I honestly don't know how long that's been the definition, or who's in charge of making that up. But I will tell you that I don't remember a time when that wasn't the definition.

And I've been around a couple of decades already.

So is anyone factoring in Mid-cap inflation these days?