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...

In this podcast episode I sit down with Ian McMillan to talk charts and answer the question: Why Technical Analysis?

Ian makes some good points about Financial Advisors who "buy and hold", that you can often find at the golf course. He's always striving to be the opposite of that.

When it comes to the market, we dive right in to talk market internals, major trends, Gold, Energy and Bitcoin.

Ian and I have known each other for years so it's always fun to catch up and see what's on his mind. Enjoy!

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.

One thing that stood out to me this week was the relentless amount of mixed intermarket signals.

On one hand, we have Lumber Futures getting completely destroyed. When I've ignored Lumber in the past, it's been a mistake.

This is probably something we shouldn't ignore:

On the other hand, if things were about to get worse for the Stock market, then why are Consumer Staples and Utilities both making new relative lows?

This is evidence of risk appetite, not risk aversion:

I think this all continues to speak to trading what's in front of you, and not overthinking the intermarket relationships.

We discussed all of...

This week we're looking for a long setup in the Financial Services sector. Slowly, we're seeing a resolution in trend in the names that we've been tracking. And this is one of them.

We retired our "Five Bull Market Barometers" in mid-July 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.

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

As markets remain mixed we continue to see lackluster action from some US indexes even as some others make new highs.

Large-Caps recently charged back to fresh all-time highs, but the Small- and Mid-caps are still facing some serious overhead supply.

As always, we’re snooping around our market internals chartbook to see what’s really happening underneath the surface in these areas, and whether internals agree with the price action in these smaller market-cap indexes. And even more importantly, if they support, or disagree with the new highs in Large-Caps.

We'll also answer the question: "Just how bad is the recent deterioration in breadth in some of the weaker indexes?"

We have been getting fewer new highs for a while now, but after such extreme initiation thrusts this isn’t too unordinary, and nothing to cause huge concern.

Although, considering the lack of new highs...

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

Crude Oil has been the Lone Ranger within the energy complex since early June, relentlessly pushing to new highs while other energy-related commodities have been stuck below overhead supply.

But that’s all changing this week as Heating Oil and Gasoline just broke above key resistance levels to new multi-year highs.

The recent strength from Energy also comes as Base Metals continue to cool off and correct. Copper, Tin, and Aluminum are all rangebound below logical levels of resistance after explosive moves off their 2020 lows. This is yet further evidence of the bifurcated market environment we're in right now. All we can do is focus on finding opportunities in areas that are trending... So, let's talk more about Energy.

What started out as a questionable...

From the desk of Willie Delwiche.

The weight of the evidence is neutral and we’ve been discussing how it has been and remains a messy environment for stocks. We can see this in our Risk On/Risk Off Ratio which has been consolidating for several months. What caught our attention recently is how closely this ratio has moved with Emerging Markets. When looking for evidence of whether the market is poised to break out (which some indexes suggest it is), break down (which some breadth divergences suggest is a possibility), or continue to move frustratingly sideways (which seems to be a minority view at this point), we would start with this chart. If the Risk On/Risk Off Ratio and Emerging Markets are making new highs, the cyclical is probably ready to resume. If they are moving lower, a deeper correction for stocks could be in store. While they continue to move sideways, it probably remains a “less is more” kind of market.

Every so often I like to put on some delta neutral credit spreads to balance out the portfolio a bit. It's all about diversifying the books so that I'm not solely reliant on direction or volatility. We've got positions on currently that will benefit from big moves in either direction, but what if the market just grinds sideways for a bit?

This is where some delta neutral credit spreads can help out.

And my preference is to initiate these trades in liquid ETFs that are exhibiting relatively high implied volatilities.

This week I popped into Yahoo Finance to chat with their Technical Analyst Jared Bilkre.

We discussed the potential bottom in Bitcoin earlier this week. If Bitcoin is above 30,000 then a long position makes sense. But if it doesn't, I think there's probably good support at zero. Who knows how low it can go from there. But I won't be in it, so it's not my problem.

With the Nasdaq100 Equally-weighted Index flirting with a breakout near 110 and the ARKK ETF near 130, these are the critical levels we're watching.

The Dow Jones Industrial Average, Dow Jones Transportation Average, Russell2000 Small-caps and Russell Micro-cap Indexes are all below overhead supply.

Messy for longer has been the pain trade and I think European Banks could be a big tell for the next direction of markets. We're watching that $20 level on $EUFN.

Click here to watch the video in full:

This is the video recording of our June 25th 2021 All Star Charts Crypto Weekly Strategy Session.

Where did all the bears go?

Have you noticed?

There aren't any left...