From the desk of Willie Delwiche.

Key Takeaways:

• Active/passive debate is in need of an overhaul
• Dynamic allocation emphasizes what you own as well as when you buy it
• Shifting leadership trends could force portfolio decisions

The active-passive debate has never been really well framed. It's been oversimplified to the point of being meaningless. For example, the shift from actively-managed mutual funds to passive ETF's would seem like a victory for passive proponents. But if investors have moved from buying-and-holding those mutual funds to moving in and out of ETF's, is this really a shift from active to passive?

Seems there has been a lot of talk about the stock market "pausing" or being "due for a correction."

While I see the same things the bears are seeing, I'm also seeing price action in a variety of corners of the market still telling a bullish story. And as we like to say around here: "Only Price Pays" (h/t @alphatrends).

We're also seeing bullish options flow from several "motivated" and "aggressive" traders in a variety of names. Case in point: a software storage name in our most recent Follow the Flow report caught my attention.

The thesis has been that if Bitcoin loses 30,000, we need to be aggressively shorting these digital assets.

In that environment, not only are Cryptocurrencies themselves likely getting slammed across the board, but crypto-related stocks are also going to come under pressure.

Unlike some other crypto and blockchain funds, the Amplify Data Sharing ETF $BLOK does a great job of finding stocks with direct or indirect ties to this still-niche industry. 

This is the video recording of our June 8th, 2021, Monthly Charts Strategy Session.

Here is the video in full:

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

A couple of weeks ago, we posed this question in a post titled "Can the Dollar best the BRICS?"

Back then, we were already leaning toward "NO." Fast forward to today, and it's more like a "NO WAY."

The reason for this is simple. In that post, we explained the line in the sand for our USD/BRICS Index was ~19.

In the few weeks since, this critical level has been violated. The market has spoken, and it's saying we're in for a lower US Dollar relative to BRIC-country currencies.

For you visual learners... This is what the chart looked like back then, and here is what it looks like now. Quite the difference, right?

This is just another...

From the desk of Willie Delwiche.

Key takeaway: Excessive optimism has been slow to unwind and most of our indicators are back to signalling a high risk environment from a sentiment perspective. Individual investors last week showed the fewest bears since January 2018. While complacency abounds, investor risk appetite remains shy of where it was in March, even with the uptick in speculative activity over the last two weeks. Liquidity conditions have been tightening of late and momentum trends are diverging from price trends. While the apple cart has not been upset, the load is perched precariously and one small stumble could send fruit flying in all directions. It’s not a low-risk load on which to ride.

Sentiment Report Chart of the Week: Shifting Leadership?

The decade-long trend of US outperformance remains intact. However, more and more information points toward a possible trend reversal. The S&P 500 ETF $SPY breaks to new lows relative to Eurozone ETF $EZU.  Further weakness in...

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?

It's happening...

We're finally getting a resolution from this multi-week messy range in many Crypto assets, and it's not looking good for bulls at all.

A retest of the Crash lows of 30,000 looks incredibly likely for Bitcoin in the coming days and weeks:

From the desk of Willie Delwiche.

Key Takeaway: US stocks lack momentum while Europe gains strength. Economic recovery moving beyond the US. Bond market not confirming economic & stock market optimism.

The S&P 500 finished last week just three points shy of its highest level on record. Index-level price strength comes with momentum trends rolling over and a domestic breadth backdrop that is not providing confirmation that an upside breakout is imminent. There has been a conspicuous absence of new highs - just last week, the number of stocks making new highs on Friday was below the number making new highs on Tuesday and both of those were well below the early-May peak in new highs. We are also not seeing an expansion in new lows at this point. Rather this muddied and mixed environment is more consistent with a digestive phase than sustained deterioration.

• ...

This week we're looking for a long setup in the FMCG sector. There are pockets of this sector that are displaying strength and we'd like to focus on one such idea this week.

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

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...

I feel like I say this every time I put a bearish trade on these days: My bearish muscles feel out of shape!

But the ASC team put out a bearish piece on transportation stocks last week and one of the airlines, in particular, has a setup that is uniquely interesting to me.

So it's time to put in our bearish reps to rebuild these muscles!

To kick off every week, our first priority before diving straight into our Crypto charts is to ask the simple question: Who won and who lost?

We simply scan for the largest gainers in our Crypto Universe for the prior week, and even more importantly, the largest single-day moves from the prior week. So even if a coin didn't perform the greatest for the full week, identifying substantial surges of demand throughout the week gives us great clues to where any potential future relative strength could lie.

We do similar scans for every other major asset class in the World (Stocks, Rates, Commodities & Forex), so this is no different.

All we want to know is who the leaders are.

So here it is!

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've already had some great trades come out of this Smallcap-focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."

To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.

The goal is to catch the strongest names while they're small and still have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge. We're looking at 5-10x moves just to break into large-cap land!

And what better time than now to launch a small-cap-focused column? We've...

From the desk of Steven Strazza @Sstrazza

In last week's Mystery Post, we discussed this chart and posed the question as to whether or not it was about to finally break out above those prior highs.

With price coiling in a bullish flag-like continuation pattern, yet showing waning momentum - responses we're mixed with many wanting to wait for more information.

The chart was a long-term look at the Global Auto ETF $CARZ. And as far as the impending breakout is concerned, it looks like we got our answer this week...

Here's the same weekly bar chart. Looks a bit different now, doesn't it?

CARZ kicked off the week with a breakaway gap as it sliced through our primary objective and recent highs around 60.

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.

Momentum Rebalance Heavy On Financials

One of the big lessons investors have been taught this year is that Growth is not Momentum. For many years, Growth-oriented sectors held the reigns of Momentum strategies. But that's not because the two are synonymous in any fundamental way. It's simply because growth stocks have been where the momentum is. In other words, they've been going up!

Well, that's changing and this is yet another data point that supports this view. After MSCI’s semi-annual rebalance of the Momentum Factor ETF $MTUM, Technology has shrunk from a 41% to 18% weighting, while Financials’ weighting has shot up from a measly 2% to 32%. Moreover, both Consumer Discretionary and Communications have shrunk in their weighting, while the other Value sectors - Industrials, Materials, and Energy - now represent a far more significant portion of the ETF.    

...

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 continued its strength this week as over 77% of our list closed higher with a median return of 0.50%.
• Crude Oil was the strongest, closing out the week with a 5% gain as it trades at its highest level in several years.
• The biggest loser of the week was Copper losing over 3%.
  • Check out this...

From the desk of Steve Strazza @Sstrazza

We held our June Monthly Strategy Session this past Thursday night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month. 

By focusing on long-term, monthly charts the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a "big-picture" point of view.

With that as our backdrop, let's dive right in and discuss three of the most important charts and/or themes from this month's call.