We debuted a new scan recently- The Outperformers.

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.

Last week, something magical happened.

Something that hasn't happened in a long time!

ITC was up by 6.83%.

If you've invested in this stock, then you know that such a move in ITC is not that common. And more often than not, the follow-through move is generally absent.

But what do we have this week?

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

In recent weeks, the market has taken a risk-off tone as dollar-denominated risk assets have come under increasing pressure. 

Major US stock indexes have pulled back, and procyclical commodities such as crude oil and copper continue to chop around beneath overhead supply. 

Interestingly, we haven’t seen much of a bid in defensive assets through the recent bout of downside volatility. US treasuries have been relatively quiet, and the dollar remains below its August highs. Meanwhile, bond-proxy sectors like Utilities and Staples continue to make new relative lows. 

None of this suggests the kind of defensive positioning that would be typical in an environment where risk assets are getting hit. 

But what about one of the most significant safe-haven assets of all... the Yen?

Let’s take a look at how the Japanese Yen is setting up against other major currencies right now and what it could mean for the market at large.

First up is the GBP...

From the desk of Willie Delwiche.

Key Takeaways:

• • Volatility shifts affect investor risk tolerances
  • Portfolios positioning reflects cautious message from weight of the evidence.
  • Watching to see if evidence argues for increasing exposure or getting more defensive

When volatility picks up, there can be a natural desire to review and reconsider or reduce all long exposure. This impulse reflects the reality that for many, risk tolerance is higher in periods of strength than in periods of weakness. Our view is that proactive risk management can lead to better outcomes than reactionary decision-making. 

That is a major reason why we spend so much time reviewing and discussing the weight of the evidence. We don't know what the future will hold, but we can increase the odds of looking in the right direction by watching where the wind is blowing....

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

Last night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!

There are no called strikes on Wall Street.

In other words, we’re not penalized for not swinging, like you are in baseball. We have the ability to be patient, to a certain extent at least, depending on your mandate. But most of us don’t have mandates! Even one of the best hitters of all time struggled when he swung at bad pitches.

This is my favorite reminder that in trading & investing, we want to wait for OUR perfect pitch, and then swing, vs just swinging at anything.

Here's a clip from our Charting School, walking through this exact idea.

https://youtu.be/10CARG4h7n4

We've brought this up today as a good reminder in the face of all this volatile action taking place in the crypto complex over the last few days.

Here's what we outlined in yesterday's crypto note:

The bottom line is that if Bitcoin’s below 46,000-47,000, things are likely to remain messy over more meaningful timeframes.

But for those with shorter-term approaches, there’s nothing wrong with taking a...

This is the video recording of the September 2021 Conference Call.

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottom-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 their direction and make them a pretty penny...

From the desk of Willie Delwiche.

Key Takeaway: Indexes caught up to and are now catching down to the median stock. Price and pessimism can fuel a snowball of volatility. The weight of the evidence argues for caution.

• Financials moved back into the top spot in this week’s rankings. It holds the top spot in the equal-weight version of the large-cap rankings as well, suggesting broad strength within the sector. Utilities & Materials saw big drops in the rankings and relative weakness in those sectors is present across various capitalization levels.
• Sector-level weakness in Utilities is confirmed in our industry group heatmap. Other areas of broad deterioration include Capital Goods, Tech Hardware, and Real Estate.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest "Under The Hood" column, where we'll cover all the action for the week ended September 17, 2021. This report is published bi-weekly and rotated 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...

The game plan in the markets over the past several quarters has been to buy the dip whenever the S&P 500 approached its 50-day moving average of prices.

So naturally, I spent the weekend thinking about some long trades that I wanted to put on today -- thinking the same old game plan was likely to continue.

Then I woke up to S&P Futures showing the largest gap down opening we've seen in a while and $SPY indicated to open significantly below its 50-day moving average for the first time in seemingly forever.

In other words, the market was telling me to rethink my bullish ideas.

That's the smell of risk-off...

47,000 was the level, and Bitcoin did not hold it.

Here's what we laid out last week:

For those with a shorter timeframe, the bias is higher above 47,500 toward the former crash highs of 53,000:

Otherwise, if this breakout fails to hold, expect more messy action in the coming days.

And fail it did...

As the old saying suggests, from failed moves come fast moves in the opposite direction:

This 46,000-47,000 level wasn't just an important inflection point in the near-term, but it also coincided with Bitcoin's last level of defense before crashing in May.

If we're below this zone of overhead supply, the bias is sideways to lower.

And as we said in last week's conference call, that's no reason to be long an asset!

...

This week we’re looking at a long setup in the Energy sector. Nifty Energy broke out above its overhead resistance. While this stock has been an absolute outperformer, the sector-specific breakout can only add more strength to the existing move.

Let's take a look at this stock.

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.

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.

The S&P 500’s 50-day moving average has garnered some attention this year, and for good reason.

During every month except April, the S&P 500 has tested its 50-day average. Only after the initial test in February did the index fall further below the moving average than where it is today. Every other instance has ended with a sharp reaction higher. Whether that happens this time remains to be seen. With investors re-evaluating their bullish views on stocks, the dollar pressing on new highs, and the action beneath the surface showing increasing vulnerability, bulls want to see more evidence of risk-seeking behavior. Seeing stocks dig in at this key level would be a great place for that to start.

While this moving average is just one indicator, it tells a good story right now. Not only is the S&P at a big level, but as we’ll discuss below - yields, large-cap groups, and even...

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:

• There was widespread weakness in our macro universe again this week as 77% of our list closed lower with a median return of -0.53%.
• Lumber $LB was the big winner, closing out the week with more than a 24% gain and registering a fresh 4-week high in the process.
• The biggest loser this week was Silver $SI, with a loss of -6.54%.
• We saw another 2% drop in the percentage of assets on our list that are within 5% of their...

Nifty 50 has been making new highs, moving past the early 2021 high in May and continuing to rise further. That's well and good. But if these new highs aren't coming through in Banks and Financials, then that's an issue.

Financial stocks make up 37.58% of Nifty 50. So it's safe to say that Nifty50 can't get very far for too long without the cooperation of Bank Nifty and Financial Services.

Every year in the Spring we hear about "Sell in May and Go Away".

And this year that would have worked out well for you. That's when the NYSE Advance-Decline line peaked. That's when the NYSE stocks really began their drawdowns. That's when the new 52-week high list peaked on the NYSE.

It's when all the Cyclicals stopped going up:

But this seasonally weak period is coming to an end soon.