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

1. No new positions today.
2. Adjustment to XLI position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!

The most significant insider buy on today's list comes from two Form 4 filings by the CEO and COO of Prospect Capital Corporation $PSEC.

The executives continue to purchase PSEC shares, this time combining in the amount of $3,971,250.

Here’s The Hot Corner, with data from September 10, 2024:

From the Desk of Steve Strazza @Sstrazza

Last week, we outlined a short squeeze in Phathom Pharmaceuticals $PHAT, which has been working for us.

It doesn't seem like the market is finished squeezing the short sellers out of their biotechnology positions.

Today, we're discussing yet another biotech stock that has a ridiculously high days-to-cover ratio and short interest.

More importantly, the risk couldn't be more well-defined.

So, we're stepping up to the plate and taking another swing at a short squeeze.

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

1. No new positions today.
2. Adjustment to XLP position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!

After Covid there was no sector that did better than Consumer Discretionary stocks.

Locking everyone down and sending them all a check to go spend, as it turns out, was great for the Consumer Discretionary sector. 

And then 2021 ended and the correction in Consumer began...

Years in the making, here is the massive top in Consumer Discretionary relative to the S&P500 that's got people talking...

Or is it that the Consumer stocks are just finding support once again where they did a decade ago?

Is the squeeze now ready to get going?

It's interesting that Chip Stocks find themselves in a very similar position.

See:...

The most significant insider buy on today's list comes from two Form 4 filings by Control Empresarial de Capitales S.A.

The investment firm added to its stake with a $40 million purchase in PBF Energy Inc $PBF and made another buy in Talos Energy Inc $TALO, this time for $3.5 million.

Abdiel Capital LP continues to build a position in Appian Corporation $APPN, revealing a $2,078,385 purchase of APPN shares.

Here’s The Hot Corner, with data from September 9, 2024:

Did you hear about the massive top in Semiconductors?

Everyone is talking about it on the internets. So it must be true. 

Seems the easy call here to make is to say "that was it". The Semiconductor story and the bull market as we know it is over...'

One of the things they teach you in the first week of Technical Analysis kindergarten is that infamous Head & Shoulders top.

The reason this is so popular is because it is "easy" to recognize. You have a left "shoulder", followed by a higher high (head), and completed with a lower high, forming the "right shoulder".

Once the "neckline", represented by these gray shaded lines above, gets broken, the whole house of cards collapses.

Or so we're taught.

But here's the thing. 

Asset prices trend. Massive topping formations are much more rare. 

In most cases, particularly during bull markets, these sorts of formations tend to resolve higher, and these "massive tops" are just figments of traders' imaginations.

This could very well be a historic top and selling opportunity in Semiconductors.

It could.

And that's the beauty of Technical...

The market continues to send signals that nearby risks are elevated, and there is no clear indication to us in which direction the next sustained move will come.

So, as has been the vibe for the past couple of weeks, I'm looking for trades that can offer my portfolio some diversification. 

With this in mind, Steve Strazza presented a bearish setup in Block $SQ that checks the boxes for me to add some short exposure to my portfolio to counterbalance the mostly long positions I currently have on the books.

Check out this one-year chart of $SQ:

The stock has been in a downtrend since long before the indexes peaked this summer, cementing its leadership to the downside.

We contend that if the broader stock market is in for further downside action, $SQ will likely be one of the stocks leading the way. As such, we're going to position with options to take advantage of a possible retest of last October's lows.

Here's the Play:

I like buying $SQ December 55 puts for approximately $3.25 per contract. This premium I pay today represents the absolute most I can lose in this trade.

But I'll be looking to exit...

From the Desk of Steve Strazza @Sstrazza

Welcome to The Minor Leaguers.

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.

Nowadays, 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 to new highs in order to focus...

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

1. No new positions today.
2. Adjustment to XLC position.
3. No exits since the last report.
4. Current status of open campaigns.
5. NEW: Volatility Snapshot.

Let’s dig in!

Last month, we discussed the Palladium ETF $PALL hitting fresh 7-year lows, breaching a critical support level.

However, the bears could not gain any downside momentum, and it seems like we're nearing a cyclical trough.

Commercial hedgers have never carried a larger net-long position. Historically, it has been prudent to not bet against the smart money in commodities markets.

And one of our favorite long-term momentum indicators, the monthly MACD, has now given us a buy signal. That said, it's still a bit messy in the short term.

Let's talk about it.

The most significant insider buy on today's list comes from two Form 4 filings by the CEO and COO of Prospect Capital Corporation $PSEC.

Together, they reported purchases of additional PSEC shares totaling $3.9 million.

Here’s The Hot Corner, with data from September 6, 2024:

I've anticipated sideways price action for a month.

This continues as my intermediate outlook (months) has shifted from bullish to neutral as Bitcoin lost $56,000 and stocks appear as if they need time to improve.

My short-term outlook (weeks) moves from neutral to bullish, with Bitcoin and Ethereum at their lows and negative funding set us up for a bounce. I remain long on tokens like HNT, SOL, and BLUR holding support, but await further market shape before becoming overly bullish.

High Beta outperforming Low Volatility stocks is usually something we see in healthy market environments.

This year, however, High Beta has been struggling to make any progress vs their Low Volatility counterparts.

"Beta" is essentially how volatile a stock is relative to its benchmark.

So High Beta think $SMCI, $NVDA, $AMD, $AVGO and others. You have half the S&P500 High Beta Index in Technology and another 17% in Consumer Discretionary.

In contrast, for Low Volatility think Berkshire Hathaway, Coca-Cola, Visa, Procter & Gamble. You'll find a lot of Financials, Consumer Staples, Utilities and Industrials in this group.

Here is the ratio of High Beta vs Low Volatility breaking down to the lowest levels all year.

This breakdown in High Beta / Low Vol comes in an environment where we have yet to see any real meaningful expansion in stocks hitting new lows.

You can't have a bear market or a correction of any kind without the prices of stocks falling. And we haven't seen that yet.

Check the new 1-month lows, new 3-month lows, new 6-month lows. You'll see.

And don't even bother with new 52-week lows, because they're...

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.