I’m always thinking about the strongest stocks.

Over the intermediate term, consumer discretionary is on top, rallying more than 40% off the summer lows.

So this is one of the areas where I’m searching for strength right now.

It’s the traditional top-down exercise for picking stocks.

The best way to go about it is to use the relative trends and drill down from sector, to industry, and eventually all the way to the individual component level.

While doing this today, I was flipping through my discretionary industry charts, and the relative ratio for Homebuilders really stood out. 

Here it is retesting a massive base breakout level from above.

This is the Dow Jones Home Construction Index $ITB relative to the Discretionary Sector SPDR $XLY. 

If the ratio digs in and bounces higher here, this is a structural trend reversal for the homebuilders versus their peer group.

The relative trend for homies vs the broader market looks similar. We’re talking about multi-decade bases that are just now resolving higher.

For the market to experience a meaningful correction, we need to see clear signs of defensive rotation—and so far, that hasn’t happened.

In the bond market, U.S. Treasuries are viewed as the defensive play, especially compared to their High Yield counterparts. 

It’s the same concept in equities when you compare Consumer Staples to the broader S&P 500. If the environment favors risk-taking, both Treasuries and Staples should underperform.

Overlaying the Treasuries versus High-Yield ratio (IEI/HYG) with the Staple vs S&P 500 ratio (XLP/SPY), you’ll notice they move in the same direction.

Currently, both are trending lower and making new lows, signaling no defensive positioning from bond or equity investors.

As long as these lines keep trending down and to the right, there’s nothing to worry about for risk assets. But if they start to turn higher, that would be a key warning sign of trouble ahead, potentially...

Here's the recording and the chartbook from the third Breakout Multiplier Mastermind class.

Here, we go deep into the anatomy of a Breakout Multiplier trade, from idea generation, including system mechanics and trade executions, to risk management, including position sizing and, of course, selling the double.

Here's the replay and chartbook from the January 16 Weekly Strategy Session.

Be sure to join us on Thursdays at 11 am ET and maximize your return potential.

One of my junior analysts (Rick! He's the Man!) brought a stock to my attention that is in an attractive sector that could fly under the right conditions. 

Add to this that there is a high short interest and there is "meme" stock potential, and this could really be an upside portfolio-buster for us.

In today’s Daily Digest, we’ll review the following:

1. New position in USO.
2. IMPORTANT: Adjustment to Position Details in IGV and XLV
3. No exits since the last report.
4. Current status of open campaigns.
5. Volatility Snapshot.

Let’s dig in!

The first earnings season of 2025 is officially underway and it started with a BANG! 🎉

JPMorgan Chase $JMP was the first significant report of the season.

This report provides traders and investors with insight into the strength of the consumer, economy, markets, and more.

As the legendary anchorman Ron Burgundy said, "I don't know how to put this, but I'm kind of a big deal."

JPMorgan and the S&P 500 dance together. Their current 52-week correlation is over 0.9, which is a very strong relationship.

We love to say, "You can't have a bull market without financials," and this chart is precisely why we say it.

The market has made the maxim self-evident.

JPM wasn't the only report that moved markets yesterday.

*click the image to enlarge it

In addition to the absolute price change, the reaction score was over 6, which means the stock price moved over 6 standard deviations.

It wasn't just about the reported numbers. The market also loved to hear their optimistic...

EcoR1 Capital, a biotech-focused hedge fund, made waves today with a substantial Form 4 filing.

The fund reported a purchase of $2,278,811 worth of Zymeworks $ZYME, increasing its ownership stake to 22.61%.

It’s worth noting that EcoR1 has a strong track record of identifying winners in the biotech space, often making concentrated bets on companies with transformative pipelines or innovative therapies.

Here’s The Hot Corner, with data from January 15, 2025:

On another note, Phillip Frost, CEO of OPKO Health Inc $OPK, disclosed the acquisition of 500,000 shares, continuing a pattern of insider buying.

Today's number is... 1

Yesterday, the bulls demonstrated that they are still present, with the S&P 500, 400, and 600 reaching their highest 1-month highs since November.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The blue line in the top panel is the S&P 500 index price.
• The black line in the second panel shows the percentage of S&P 500 stocks making 1-month highs.
• The gray line in the third panel shows the percentage of S&P 400 stocks making 1-month highs.
• The red line in the bottom panel shows the percentage of S&P 600 stocks making 1-month highs.

The Takeaway: Yesterday, all major indices increased by over 1.5%. This was an impressive day for the Bulls on the back of eased inflation fears.

With this broad participation, we saw 1-month new highs move higher and have now reached their highest levels...

Sector rotation is the lifeblood of a bull market.

We're seeing Small Cap Financials $PSCF begin to weaken to red while the other financial ETFs are still green.

It's positive to see that despite this recent weakness in financials, the Large Cap ETF $XLF has failed to hold its breakdown and is back above support.

This is a key theme right now, where breakdowns are failing. Of course, this is positive information for bulls.

If we're in the context of a bull market, it wouldn't be surprising to see all these rotations under the surface.

An area that needs to be discussed are commodities. We're in a super cycle and there's plenty of areas to profit. JC and Jason Perz discussed exactly this in a brief video, it's got a bunch of great insights.

You can watch it by clicking here....

Large Cap Growth is still the predominate theme of leadership right now. No changes here.

The most notable shift has been the S&P 500 $SPY breaking below this key level of support. SPY must reclaim 585 to repair the recent damages.

It's certainly hasn't been a great start to the month, which carries a wide set of implications for the rest of the year.

JC just shared his brief chat with Jeff Hirsch explaining what this price action means, it's a fantastic video. You can watch that here.

One of our favorite setups occurs when a stock breaks a key level, fails to follow through, and then reverses sharply in the opposite direction.

These patterns are known as “shakeouts”, and the best ones set the stage for powerful breakouts.

It is no surprise these shake n’ go setups have earned us the quickest doubles. They’ve also delivered some of our best trades in 2024.

When we notice something working, we keep doing it. 

This week, we saw a lot of breakdowns failing, and shaking traders out before ripping higher. We jumped on the opportunity and put a new trade on the Regional Banks ETF $KRE. 

After hitting fresh two-month lows Friday, it’s reversed higher and trapped the bears this week.

The bounce is resulting in a textbook “scoop n’ score” setup—just as momentum is shifting in our favor. The best trades start working right away like this.

Target is still lost in a post-Pandemic Fog

Thanks to everyone who joined us for today's Hot Corner Insider Weekly Strategy Session.

From the Desk of Steve Strazza @Sstrazza

Welcome to The 2 to 100 Club.

In this scan, we look to identify the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there.

We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table, you'll notice we're only focused on Technology and Growth industry groups such as Software, Semiconductors, Online...

In today’s Daily Digest, we’ll review the following:

1. No new positions today.
2. Defensive adjustment to ITB position.
3. Exited  IWM at Profit Target.
4. Current status of open campaigns.
5. Volatility Snapshot.

Let’s dig in!

We can all agree that the United States government loves to spend money, no matter who is in the White House.

Just look at the U.S. Debt Clock.

Because of that, the infrastructure and construction industries are booming. 

Think of the billions (trillions, in some cases) of dollars in funding the U.S. government passed recently.

Bills like the Inflation Reduction Act and Jobs Act have fattened the pockets of corporations and their shareholders.

Primoris Services is one of those corporations. Its shares have soared 150% over the last year, and revenue and earnings have reached new record highs.

They're riding the tailwinds of significant secular trends.

In addition, the stock has been rewarded for its earnings reports in three consecutive quarters and has rallied in the last seven out of nine quarters.

The bottom line is the market likes what this company is doing, and so do we. 

Today’s standout transaction is a Form 4 filing by Director Robert Niblock, who made a bold statement with the purchase of 3,000 Lamb Weston Holdings Inc $LW shares, for a cost of $182,818.

Here’s The Hot Corner, with data from January 14, 2025:

Meanwhile, Senator John Boozman of Arkansas has also caught our attention, reporting a buy in an amount between $1,000 and $15,000 in Applied Materials $AMAT, a key player in the semiconductor equipment space.

Today's number is... 16

My Fear or Strength Model has been in bearish mode for the last 16 trading days.

Here’s the chart:

(right-click and open image in new tab to zoom in)

Let's break down what it shows:

• The black line in the top panel is the S&P 500 index price.
  • The green shading highlights the model is in bullish mode.
  • The red shading highlights the model is in bearish mode.
• The black line in the middle panel is the 10-day average of the NYSE+NASDAQ net new high advance decline line - The “strength” component of the model. The gray shading represents the AD line is rising.
• The black line in the bottom panel is the Volatility index - the “fear” component of the model. The gray shading represents the VIX reading above 28.5.

The Takeaway: My Fear or Strength Model is a tactical framework that has two triggers: 

1. Buy stocks when...

Today is the infamous CPI day, where thousands of traders panic trade a number that's already baked into every model from here to Jupiter.

The real story? Yields are up, and they're throwing hands on my stock portfolio.

CPI day is basically astrology for finance bros. We check the numbers and retrofit narratives to explain why the market did exactly the opposite of what everyone predicted. "Mercury must be in retrograde" has about the same predictive power as Wall Street forecasts right now.

Meanwhile, Powell sits in his office, probably wondering why despite giving the most choreographed monetary policy in history, markets still act surprised every time he does exactly what he said he would do three months ago.

Earning calls now include the mandatory "higher for longer" drinking game, where management try to explain why their growth projections assumed yields would magically return to 2020 levels.

❌ Yields do NOT pass the vibe check.

They're that Andrew Tate fan at a party – nobody invited them, nobody likes them, but somehow they're controlling...