Let me make something perfectly clear.

I'm confident that fundamentals are what drives the price of assets.

You also cannot argue against the fact that those prices regularly trend over time.

So Technical Analysis allows us to identify those trends, and profit from them, if that's something that you're into.

For us, we're certainly profit enthusiasts.

That's why we focus on Technical Analysis.

It's often said that patience pays dividends.

Of course, in the crypto world these adages don't make too much sense. So, just like how we say that "Tether's a position too," in crypto it can be said that "patience pays sats."

But all jokes aside, Bitcoin has fallen back below 41,000, placing prices right back into this range. With Bitcoin below this level, new longs are likely to stumble in the coming days/weeks.

At least in the near term, some level of patience is warranted.

So while we're anticipating we ultimately resolve higher, the only question that remains is "how long?"

This is the video recording of our August 2, 2021 Monthly Charts Live Strategy Session

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 their direction and make them a pretty...

From the desk of Steven Strazza @Sstrazza

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 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?

Key Takeaway: Indexes chopping higher, breadth chopping lower. Commodities leading the pack in 2021. Bonds not fearing inflation.

• Health Care made a new high last week and that helped fuel its rise in our relative strength rankings (up to the fourth spot and into the leadership group). Energy and Materials also ticked higher in the rankings, while Consumer Discretionary fell three spots.
• Despite an overall theme of large-cap strength, the industry group heat map shows deteriorating conditions across sizes for the Energy and Banks groups.

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."

To make the cut for our Minor Leagues list, a company 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.

The goal is to catch the strongest names while they’re small and still have serious upside potential. If any of these stocks ever climbs 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!

Let’s dive into this week’s report and see what’s happening in some of...

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.

• Our Macro universe performance was mixed this week as only 62% of our list closed higher with a median return of 0.22%.
• The biggest winner of the week was the Volatility Index $VIX which gained 6.05%.
• 10-Year Yield $TNX shows continued weakness as this week’s biggest loser, dropping -3.65%.
• Momentum remains constructive from a structural perspective, as 60% of the assets on our macro list are in a bullish momentum regime....

There's a reason long-time investors are invested in low volatility household names that pay steady dividends: because over the long run, they work! The steady dividends and low volatility can be counted on to take care of us in retirement. This is a lesson I've been trying to teach my 7-year old Son. We created a small account for him and we're teaching him the power of investing in what you know (or in our case, in companies we spend money on as a family) and in companies that pay dividends which teaches the power of compounding.

One of those names we're invested in is also now showing up on All Star Charts momentum scans and may be set to accelerate its price price action.

This is the video recording of the August Options Conference Call with Sean McLaughlin & JC Parets.

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 biggest things the bears have going for them right now is the fact that the 10-Year Yield is trapped beneath the critical 1.40% level. As long as that remains the case, the trend is lower for rates, and higher for US Treasuries. But we want to stay keenly aware of any signs of a trend reversal as we continue to see a barrage of mixed signals when it comes to risk appetite around the globe.

In the chart below we’re looking at an island reversal formation in the 30-Year which recently sent the yield back above its key 1.90% level. Why are we looking at the 30-year? Don’t we usually use the 5-Year as a leading indicator? As always, the tools we want to use boil down to the kind of market we’re in. Right now yields are trending lower while spreads are contracting. This tells us that the long end of the curve is moving at a faster rate than the short end. For this reason, we’re...

Regardless of the market environment, we always want to be pushing our bets on secular leaders.

The most effective way of positioning ourselves with the strongest (or weakest) names is through relative strength analysis - by simply comparing names to their counterparts.

So before we dive into all some of the names we're buying, let's address where this space finds itself, and what we're anticipating in the coming weeks and months.

OK so 2 quick charts for you.

The first one is Johnson & Johnson trying to break out of a 6-month base.

Today we're going to take a look at a long setup in the Chemicals space. This stock has broken out of a big base, and is demanding attention!

Let's take a look at this name.

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.

The Nifty Metals Index is now trading at new all-time highs. At a time like this, it becomes crucial to identify the constituents that are displaying strength.

Let's take a look at some of the names in the Metal Index that are at interesting levels.

After a pause of two months, the Metals Index has broken out above its prior resistance and looks good for a dash ahead! New all-time highs come at the back of participation from the index constituents.

So which names are we looking at in the weeks and months ahead?

First up, is Hindalco.

Hindalco featured in our Trade Ideas pretty often in the first quarter. After a brief pause, the stock looks ready to rally with the break out above the level of 407. The indicator has continuously displayed strength and has been hovering around the bullish regime.

With the move above 407, the stock is trading at an all-time high!

We are bullish above the level of 407, with a target near 606.

Click on the chart to zoom in.

From the desk of Steve Strazza @Sstrazza

A major theme we've been hitting on in recent months is that we've reverted to an equity market landscape dominated by US Large-Cap Growth stocks. 

So we know that's where the strength has been. But up until March-May of this year, these relative trends had actually been favoring Small-Caps and Value, and even other parts of the world over the US.

So was this just a counter-trend rally, or the beginning of a sustainable rotation? The real answer is it depends where you look and how you look at it.

But we are definitely seeing some developments that suggest there could be a rotation back in favor of value-oriented and cyclical stocks in the near future.

This becomes particularly clear when we look at the relative trends of some of these groups vs the S&P. And if we see these industry groups break out on an absolute basis - which many of them already are - this could be the extra juice needed for a true relative trend reversal that would put value back in the driver seat.

Let's dive in and...

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.

There's the good, there's the bad, and then there's the ugly.

Here are a few things that I'm thinking about right now....

First the obvious and arguably the ugliest. 

Emerging Markets are getting crushed. And it's not just a China thing. It's been broad-based selling in most emerging markets.

You also see it spilling over into stocks like Industrial bellwether Caterpillar that tend to move with EM:

But I do have some good news.

I woke up to this gem today.

Usually, by the time the Economist gets wind of a trend, to the point where they even make a cover out of it, we're usually no where near the beginning of that trend.

...

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

We can’t ignore the resiliency in base metals. 

Despite the classic year-two chop, base metals have remained buoyant while many other risk assets have come under pressure. They’ve even gained ground during the recent bout of US dollar strength. 

And now we’re beginning to see signs of serious leadership emerge as Crude Oil consolidates its recent gains. The broad-based strength beneath the surface for this procyclical group of commodities has been undeniable. These risk-on metals have been the steadiest performers within the entire asset class for the better part of this year.

Steel has relentlessly pushed to new highs --we can’t wait to see those monthly candles! Tin followed through to the upside after last week’s...

Once again this month, I’m going to share info on positions that were closed in the month of July. As a reminder, our exit plans are always laid out ahead of time in each trade idea we publish. In every case, the exits mentioned below were all in accordance with the plans as laid out.

As we head towards August expiration, we only have one open position remaining with expiring August options. But July was certainly a busy month for exits -- both profitable and not -- as a couple of market whipsaws shook the trees and knocked us out of a bunch of positions.

Positions with August options that need monitoring: