It's been a minute since we've put some delta-neutral credit spreads on. And while VIX is off its highest levels of the year, there is still plenty of elevated premium in pockets.

The team here at All Star Charts has been monitoring the elevated options premiums in the Consumer Discretionary space. The $XLY ETF has been persistently hanging around the top of our implied volatility lists for the last couple of months. We talked about it yesterday during the @allstarcharts live twitter spaces chat.

And I like having a few delta-neutral trades on to provide some portfolio balance against my bullish and bearish directional bets in individual stock names. So $XLY is providing us a good opportunity to collect some income.

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

Phillip Frost, the healthcare industry veteran and CEO of OPKO Health $OPK, is on our list again as he accumulates more shares in the pharmaceutical and diagnostics company.

Yesterday, he revealed an additional purchase of roughly $279,226 worth of his own company's stock in a Form 4.

I lived on 55th Street on the East side of Manhattan for a while.

To get some exercise I would often run along the East River and many times I'd run across the 59th Street Bridge over to Queens Blvd, and back.

It wasn't a long run, but it got me going and would get me away from my screens for a bit.

Exercise was part of my "support" system during some of those rougher years.

On the way out to Queens you go over Roosevelt Island (which is a really weird place btw). And then you have Queensbridge over to your left directly north of the 59th St. Bridge.

For those unfamiliar, Queensbridge is the largest housing project in North America.

It's where Nas is from, arguably the greatest rapper of all time. I personally don't make that argument, but I can see how you could (he's in my top 5).

There's a famous diss track that Nas titled "Ether".

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

The Japanese yen continues to slide.

In early April, we highlighted the multi-year base in the USD/JPY cross. We were anticipating a significant breakout based on the broad weakness in the yen.

Even gold, one of the worst performing assets, looked strong denominated in yen.

We went so far as to title the post Anything in Yen.

Funny or not, it was true.

Not long after the post, we got the breakout we expected. And, two months later, the USD/JPY is kicking off its next leg higher, printing fresh 20-year highs.

Let's take it a step further and outline some trade setups in other currencies denominated in yen.

Remember, everything and anything seems to work priced in yen these days.

First, a quick revisit of the USD/JPY chart we shared in April. Here’s the updated version:

After retesting its recent breakout level near 126, the USD/JPY pair has...

From the desk of Willie Delwiche.

This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard and our Playbook Chartbook, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.

In Focus for June: We are still waiting for the evidence that the bear market in equities has run its course and a new bull market is being reborn. While the short-term risk environment has improved slightly over the last week or so, the overall environment tilts more toward risk than opportunity and our longer-term risk indicator is still in risk off territory.

Enduring a downtrend is not a prerequisite for participating in the ensuing uptrend. We will practice patience in the batter’s box until the market delivers fatter pitches on a more consistent basis.

...

Yesterday, we explained our neutral bias over short time frames. With elevated futures leverage, we continue to anticipate whipsaw-like price action.

Last night we saw this manifest, with Bitcoin $BTC sharply selling off, giving traders yet another failed breakout signal.

This was the first strong selling we've seen in Asian hours for a while. As it stands, this is not a friendly tape for short-term directional trading.

As we said yesterday, this appears to be a “fade the breakouts” type of environment.

We also discussed the following altcoin index chart, noting that alts haven't provided a strong buy signal over short time frames.

The index is still below key support, on an absolute basis and, more importantly, relative to Bitcoin.

So, in today's post, we want to be overly obnoxious in arguing for patience.

It boils down to a few key themes:

• There's little to no directional conviction over short time frames.
...

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

Late last week, Speaker of the House Nancy Pelosi reported the purchase of a variety of deep in-the-money call options in Apple $AAPL and Microsoft $MSFT.

The contracts expire in March and June of next year.

Over the past few years, Pelosi has made some very profitable trades using in-the-money calls in names such as Tesla $TSLA and Nvidia $NVDA.

There are a handful of stocks that are displaying signs of early strength as the market moves sideways. Today we're going to look at one such stock from the Financial Services sector.

We retired our "Five Bull Market Barometers" in 2020 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

Welcome to our latest Minor Leaguers report.

We’ve had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

And it doesn’t have to be a Russell component -- it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity...

Key Takeaway:

• Yields pause, but trends are still higher.
• Sector leadership is providing little support for the indexes.
• New lows collapse but new highs are scarce.

To put it another way: even after the 60+% rally in XLE (Energy ETF) this year and broad weakness elsewhere, there are still three individual companies (AAPL,...

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...

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts 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 Impact of a Higher Dollar

We’ve talked a lot about the implications of a higher dollar. Long story short, it means lower prices for risk assets. This includes US stocks, commodities, and especially international stocks. They should all enjoy a tailwind if the dollar is to fail and roll over at these former highs.  

Overlaying growth stocks such as the ARK Innovation ETF with the Dollar Index gives us a nice visual of this relationship. Look at the large base in DXY that has formed since its 2020 peak. If we were to invert that DXY chart it would fit seamlessly with the distribution pattern in ARKK, shown below. The two have a very strong negative correlation. 

As the dollar has rallied since last year, ARKK and other stocks have come under increasing pressure. Along those same lines, if the dollar were to top out and start trending lower from here, wouldn’t this make for a logical level for ARKK...

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 big picture context 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:

• This week, our macro universe was mostly red as 77% of our list closed lower with a median return of -0.85%.
• The US 10-Year Yield $TNX was the winner this week, closing with a 7.80% gain.
• The biggest loser was Lumber $LB, with a weekly loss of -10.33%.
• There was a 4% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 15%.
• 15% of our macro list made fresh 4-week highs....

With everyone so certain about the upcoming recession, even Cardi B, why don't we take a step back and look at what the actual prices of stocks are doing.

You can see here that the Dow Jones Industrials and Dow Jones Transports have done absolutely nothing for over a year.

For perspective, stocks first peaked in January of 2018, then went nowhere for 3 years, and finally broke out:

We go where the strength is.

And until new information presents itself to get us looking elsewhere, the strongest names, best bases, and most impressive relative strength continue to be found in the energy space. Who am I to fight the facts?

Today's trade is in an Oil & Gas company that has been in an unrelenting uptrend since mid-2020 that is showing no signs of reversing.