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

Is the US Dollar Index $DXY on the brink of completing a massive reversal pattern to the downside? 

As more evidence comes into the picture, it's looking increasingly dire for the dollar. In fact, we're seeing it trend lower across all timeframes against almost all of its peers.

And this action has only gained steam over the last week as DXY has plunged to fresh multi-month lows.

Dollar weakness has been a nice tailwind for risk assets since its peak in March of last year. Any additional downside pressure in the coming weeks, months, and even quarters would not surprise us... especially if this daunting double-top pattern breaks lower. If and when this happens, further weakness from both a tactical and structural standpoint is exactly the bet we'll be making.

Let's dig deeper and look at what actually drives the DXY. By looking at the various crosses that make up the index, we gain insight in terms of building a directional bias for DXY. This process also provides a weight of the evidence...

This is a fun one. I got to sit down with Paul Ciana to talk about all things Fixed Income, Commodities and Currencies. Paul is now the Chief Global FICC Technical Strategist and Director of Research at Bank of America Merrill Lynch. But in the early days, him and I used to study for our CMTs together back in 2006.

What's nice about this is that in his current position, and for 10 years at Bloomberg prior to his 5 years at BofA, he's had the opportunity to speak to many of the largest portfolio managers in the world. I want to know what he's learned from all those conversations!

Paul always gives great perspective and as you know, the macro view carries a big weighting throughout our process. So this episode really hit home.

I took advantage and just hit him with all my favorite questions and topics in the FICC world. And he just chuckled and happily answered most of them.

This was great! I hope you enjoy...

You notice how investors often like to overstay their welcome?

The people throwing the party give them plenty of opportunities to get out. The music stops playing. The food is already gone. The lights even get turned off.

But some people still choose to stay, almost as if they have no where else to go.

And then they sit around wondering what happened?

"Oh, the DJ going home meant the party was over?"

"What do you mean they're not ordering any more food?"

"Who turned out the lights?"

These are what we call "Bag Holders".

They're an important part of the market cycle, because these are the people who are buying all the shares that the rest of us need to sell, so we can head over down the block to the much better party. The one that's just getting going.

From the desk of Willie Delwiche.

Key Takeaway: Stocks looking at a year two market. Stocks looking at a year of two markets. Economic surprises remain a tailwind for now but data struggling to keep up with expectations.

Cyclical value sectors remain in their leadership positions. New highs last week in Materials, Industrials & Financials helped pace the market, and rally participation with these sectors remains robust. The rotation out of leadership from the growth sectors can make it a challenging environment for passive investors. Technology, Discretionary, and Communication Services make up 50% of the market cap of the S&P 500, and the index could struggle to see sustained strength if these areas are not participating. Defensive areas like Utilities & Consumer Staples are buried at the bottom of the rankings. 

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance 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.

The bullish picture still lies as a structural backdrop.

But now, we're seeing mixed signals as many areas have become increasingly vulnerable in recent weeks. This is all taking place as defensive assets have found a footing for the first time in over a year, while risk-on assets approach logical levels of supply.

Recent weakness has been particularly isolated in former leadership groups, like Small-Caps and Growth-heavy areas. 

But at the same time, Value and Cyclicals have continued to show resiliency as the Commodity complex suggests risk-taking behavior.

Long story short, things have become more bifurcated than they have done in a while...

Let's jump into our US index table.

...

From the desk of Louis Sykes @haumicharts and Steve Strazza @Sstrazza

Alt Season is still very much alive and well.

In February, we did a deep dive into the wide world of crypto assets outside of Bitcoin. This turned out to be quite timely as many of these "alt-coins" have booked significant gains in the time since.

It's no longer just Bitcoin, Ethereum, Litecoin, and some others. There are thousands of cryptocurrencies out there now!

As this new asset class continues to grow and blossom, we continue to pay close attention to the leadership within the Crypto complex.

The latest Young Aristocrats report dropped on Friday last week. If you love dividends combined with momentum (who wouldn't?), then this report is always a must read.

Banks of all sizes have been a bright spot for us lately as we're currently enjoying gains in Morgan Stanley $MS and the Regional Banks ETF $KRE.

Well, this week's YA report highlighted a couple more banks with attractive setups and one in particular looks like a great setup to play with straight long call options.

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. We can then put these near-term developments into the context of the big picture and glean insights into 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.

• Procyclical Commodities led again this week.
  • Copper was up over 6.41% and closed the week at fresh all-time highs.
  • Lumber had another monster week, gaining over 12% but is at an extreme daily momentum reading of 91.
• The biggest loser of the week was the Volatility index falling over 10%
• New highs continue to be the theme across all timeframes, particularly from...

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.

One of the main themes we’ve seen unfold as the market has rallied off its recovery lows from last year is the rotation into value stocks and more cyclical areas of equity markets. We’re seeing it around the world too, and it’s also responsible for driving many other relative trends like that between small and large-caps and US vs ex-US equities.

Our line in the sand for the value over growth thesis to remain intact is 1.70 in the large-cap ratio (IWF/IWD). It’s that simple. And price has been trapped below it ever since breaking down earlier this year. Additionally, we’re also eyeing Tech vs Financials as well as the small-cap growth vs value ratio for confirmation of what we’re seeing from large-caps. Both collapsed lower to end the week. Not only are they beneath the levels we’ve been watching (3.70 in XLK/XLF and 1.90 in IWO/IWN), but they also...

We've been talking about this rotation out of Growth Stocks and into Value Stocks since last year. The trend here has been very strong.

We keep seeing this all over. Check this out for more.

Another chart that stood out this weekend was the number of new 52-week highs on the NYSE, which has much more exposure to value and much less growth.

Meanwhile, the Nasdaq, which is almost all Growth, isn't seeing these new highs at all.

No one wants them.

So commodities seem like they're in the mood to rally! We've seen Base Metals have their fair share of moments in the spotlight, but what about the truly shiny commodities? Where are Gold and Silver off to, next? Or are they consolidating and quietly hatching a plan to break out soon?

Here's an update on what the (presently) less popular metals are doing.

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 Small-Cap focused column since we launched it late last year and started rotating it with our flagship bottoms-up scan, "Under The Hood."

Ultimately, to make the cut for our Minor Leagues list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort by proximity to new highs in order to focus on the best players only.

The idea is to catch the strongest names while they're still small and have serious upside potential. If any of these stocks ever climb up the ranks to the big leagues, just imagine the returns. 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?...

This week we're looking at two long setups in the Pharma sector. With Nifty Pharma breaking out above its resistance of 13,500, a couple of stocks that we've been tracking for quite some time now have also followed through with a breakout.

Let's take a look at these names and track their levels going forward.

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.

Have you noticed how it's the Value sectors that keep shining this year?

It's not Tech. It's not growth.

This isn't 2020.

This is 2021. 

Deal with it.

When was the last time you saw relative strength like this coming from Financials and Materials?

Every month we get a fresh batch of Monthly Candlesticks. It only happens 12 times a year.

I promise you guys from the bottom of my heart that there is no other part of my entire process that provides as much value and information as my monthly chart review. Premium Members can access the Chartbook here.

In the meantime, my friend Josh Brown and I have been doing these short monthly videos since last summer.

On this latest episode we talk about how the market is behaving like it normally does in Year 2 of Bull Market cycles. Choppy, messy, and with a much different profile than the prior year. And, not only is that normal, but anything else would be historically abnormal.

Defensive areas like Consumer Staples, Gold, Bonds and Japanese Yen have been shining. We didn't see that in Year 1. It was the exact opposite.

We like shorting the Nasdaq here and being very picky when looking for Value stocks to buy.

This is always a fun chat.

Hope you enjoy it!

The story of Value stocks continuing to be the leaders is something we absolutely cannot ignore.

But have you noticed? Many investors are ignoring it, particularly in the United States. "I'm a Growth Investor", is what they tell me lol. What even is that?

You can really see this rotation taking place in the ratio between the Nasdaq100 and the NYSE Composite:

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 longer-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...

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

Commodities continue to rip higher. 

Copper is breaking out to new all-time highs. Soybean Oil is trading at its highest levels in over a decade. These moves come as Grains, Lumber, and Base Metals have resumed their near-vertical ascent over the past couple of weeks. 

But risk assets hitting our price objectives or running into logical levels of supply are key themes playing out across the market right now.

As many commodities approach key levels of potential resistance, it raises an important question…

Will sellers step in as they have in stocks?

Let’s look at some charts that could provide valuable information for answering this question.

First up is Aluminum Futures:

...

From the desk of Willie Delwiche.

The headlines this week focused on the, for lack of  better word, carnage in some of the most speculative areas of the stock market. While late week rally attempts have taken some of the sting out of those declines, many of the hottest areas from 2020 are seeing more breakdowns than breakouts. While maybe not as exciting as SPAC’s and Innovative Tech companies, I’m paying attention to what’s going on in the Financials sector. The sector made new highs this week (as did Materials and Industrials), and its new high list expanded as well. The 75% of stocks in the sector making new 52-week highs is the highest in the decade’s worth of data we have available. Maybe I’m old-school, but leadership and broad support from Financials is not usually evidence of an overall market that is on the cusp of trouble.