From the Desk of Ian Culley @IanCulley

What will ignite a precious metal rally to new all-time highs?

We often discuss the dollar and real yields as critical catalysts for a sustained uptrend for gold and silver. It’s simple: These shiny rocks will struggle if the dollar and rates continue to rise. 

But there’s more.

I want to share another crucial piece of the puzzle – commercial positioning.

We analyze the Commitment of Traders (COT) report generated by the Commodity Futures Trading Commission (CFTC), which updates the positions of the largest speculators and commercial hedgers weekly.

We publish a table with this data in our commodities post every Friday.

Our focus lies solely on the commercial hedgers for one reason – they represent the largest short sellers for any given market. By monitoring these players, we discern the attitudes of the strongest hands.

Think of the COT as a sentiment gauge.

Commercial hedgers reached extreme levels in gold last fall, coinciding with significant troughs in price in 2016 and 2018:

Strong hands move markets. And the strongest hands were...

JC had a great post this weekend about our favorite Magazine Cover Indicator violator -- The Economist. Go give it a read and then come on back here.

Are you caught up? Good.

You read what JC said to do. Let's do it.

We began last week arguing the case for short-term patience while emphasizing that the primary trends have shifted higher.

As we move into the middle of February, seasonality trends suggest a choppy couple of weeks ahead.

At the same time, momentum in the US dollar has accumulated in recent days, as we observe some mild selling pressure in crypto markets. With the CPI release on Tuesday, it's reasonable to expect this volatility to continue.

This comes as Bitcoin retraces following its first retest of the August 2022 highs.

The next new position in our Paid-to-Play portfolio is:

Cathie Wood’s ARK Investment Management is on our list today, as it just filed amended 13Gs for Roku Inc $ROKU and Cerus Corporation $CERS.

The asset manager reported a small increase in its ownership of ROKU, from 9.94% to 10.12%.

For its CERS position,  it revealed a stake of 10.11%, up from the 8.94% previously reported.

From the Desk of Kimmy Sokoloff

For today, we'll watch to see how $SPY handles the eight-day moving average 409.

I think tomorrow's CPI print will set the stage for the remainder of the month.

Did you see what the haters over at The Economist published last week?

Most of you have been around for a while so you already know.

But if you're new here to Allstarcharts, let's just say we do very well consistently taking the other side of this publication.

Few contrarian indicators are as reliable as The Economist:

It's the weekly commodity edition of What the FICC?

I want to share with you a trade idea I wouldn’t have considered a year ago...

Check it out!

Remember last year when everyone was bearish?

And I mean everyone!

It was funny, there I was telling people it was a new bull market, because we actually do the work around here, but investors weren't buying it.

In fact, we saw 44 consecutive weeks of more bears than bulls among individual investors. This was an even longer streak than we saw during the Financial crisis. Longer than COVID.

People were really angry.

You can see the AAII Bulls and Bears, along with their consecutive streaks plotted below:

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.

From the desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

Click table to enlarge view

We filter out any laggards that are down -5% or more relative to the S&P 500 over the trailing...

From the Desk of Kimmy Sokoloff

The market was range-bound today. $SPY traded between 405 and 408.

We have CPI on Tuesday, so that will help the market pick a direction.

From the Desk of Willie Delwiche.

Nearly three-quarters of the way through Q4 earnings season, two things stand out: stocks that have reported earnings misses have been less severely punished than in the past and an increasing number of companies are having their earnings estimates for the coming year revised higher. 

Why It Matters: This earnings season has hardly been spectacular and the percentage of companies beating estimates has been below average. Aggregate earnings numbers may (or may not) need to be revised lower as we move through 2023. But at this point, the worst case scenarios are not playing out and that has left plenty of folks offsides. Investors have moved to embrace the strength we have seen so far in 2023 and analysts are running higher numbers through their models. After seeing fewer and fewer upward revisions to earnings estimates in H2 2021 and H1 2022, the trend stabilized over the second half of last year and for now is ticking higher. The market doesn’t tend to get into too much trouble when analysts have...

From the Desk of Ian Culley @IanCulley

I want to share with you a trade idea I wouldn’t have considered a year ago.

I balked at first. This trade’s simply not in my wheelhouse. But I’ve learned so much here at All Star Charts over the past three years.

And "to be open-minded" has been one of the most impactful lessons. 

Now, this setup has my full attention. Risk is well-defined, and the upside potential is heavily skewed in our favor.

I can see the spin on the pitch.

I’m talking about natural gas…

Before I lay out the levels, let’s step back and look at the big picture.

Natural gas stocks, represented by the Natural Gas ETF $FCG, haven't experienced the same extreme sell-off as natural gas futures $NGF:

In fact, they’re hanging tough much like other energy stocks. We’ve seen this before with crude oil and the Energy Sector ETF $XLE in recent quarters. 

So far, crude oil is carving out a base while XLE continues its...

This is the video recording of our February 10, 2023, All Star Charts Crypto Weekly Strategy Session.

Strazza and I did The Flow show earlier this week in which one trade that stood out and caught my interest was a juicy short squeeze candidate.

Checking back on it today, the stock still maintains a short position greater than 20%. That means more than one-fifth of all shares outstanding are held by people with a short position. And if this stock starts busting higher, the only way traders holding a short position can end the pain is to buy the stock.

This can potentially fuel a rapid rise in share prices (see: Gamestop $GME circa early 2020).

I'm certainly not calling for a repeat of past meme stocks short squeezes here, but in this case, we've got a stock that's chart is in the middle of completing a beautiful base and short holders are no doubt keeping their fingers near the trigger to exit this position quickly if we see some follow thru to the upside.

That creates opportunities for us.

We've adjusted a position in the Paid-to-Play portfolio today:

The largest insider buy on today’s list comes in a Form 4 filing by Bryant R. Riley, the chairman and CEO of B. Riley Financial $RILY.

Riley reported a purchase of $5.4 million worth of RILY stock.

From the Desk of Kimmy Sokoloff

I'll say this again, as I say it in the live trading room often: In a great bull market, you don't see this level of volatility.

This is not to say we can’t come out of this chop and slop. But, at the moment, we're still in the vortex.

It's the weekly bond edition of What the FICC?

I thought it was odd bonds didn't react to last week's rate hike. Regardless, the lack of volatility represents a positive development for risk assets, especially stocks.

Check it out!