Monday night we held our June Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying 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.

From the desk of Louis Sykes @haumicharts

There's a lot of pain out there.

It's not just retail. Some of the most sophisticated crypto funds on the planet are blowing up. Lives are getting destroyed.

But here's a quick reminder: The best trades come when others are forced to exit and are at their lowest points.

Is it a nice way to make a living?

No. But you have to deal with it. Otherwise, you end up being on the wrong side.

The ETF providers in their infinite wisdom seem to be feeding on this sentiment, with the first short Bitcoin ETF being launched in the US this week. This feels awfully reminiscent of October, when the first Bitcoin futures ETF was launched.

Weeks after, the market put in its last top.

There is probably a certain segment of the investing population that would look askance at me if I mentioned we're seeing "strength in China." They wouldn't believe that is possible. According to the news media they consume, China is "a mess." Perhaps that is true? But we only follow price here at our shop, and price is beginning to tell a different story.

Today's trade idea comes from TWO seemingly unlikely places: China and Internet! (what??????)

And when you see this chart of the Chinese Internet ETF $KWEB, you'll see why:

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

Whatever we’re looking for, the market has it.

If we’re searching for large topping patterns and strong downtrends, there’s plenty to go around, especially in the bond and stock markets right now.

Some people love taking the short side, feeding on the doom and gloom narratives accompanying the selling pressure.

But if that’s not your cup of tea, plenty of markets are trending higher. If you’re more interested in assets making new highs and like buying high and selling higher, look no further than the currency market.

When it comes to forex crosses these days, it’s simple.

All we have to do is put the US dollar in the numerator or place the Japanese yen in the denominator, and we get big bases that have either broken out or are on the verge of breaking out.

It’s that easy.

We’ve highlighted the yen in recent posts, so today we’ll switch gears and focus on a couple USD crosses from northern Europe.

Let’s dive in!

Here’s the US dollar/Swedish krona cross:

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.

This is the video recording of the June 2022 Mid-month Conference Call.

We discussed:

• The S&P500 and Dow Jones Composite stuck below overhead supply
• Major US Indexes are below their AVWAPs from the COVID lows
• 30 consecutive weeks of more stocks making new lows than new highs
• Seasonality could become a tailwind in July
• Sentiment is as bad for stocks as I've ever seen
• Relative strength out of Chinese Internet and other "culprits"
• Bitcoin near important support
• The US Dollar controls all of this. All eyes on DXY
• Breadth Deterioration in Commodities
• Long opportunities in Financials
• Defensive Sectors are vulnerable
• Gold is still below overhead supply
• Copper/Gold ratio breaking down pointing to lower rates
• Japanese Yen hits new multi-decade lows
• Buy the dip in bonds? I think so

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.

How's the Bear Market treating you?

We're going on over 16 months of this so far, and counting....

Remember, stocks peaked in February of 2021, meaning that was the best things were for stocks during this cycle. And it's been a slow deterioration ever since.

The first stocks to peak are what we refer to as the "Culprits". Every bear market has that group that you can point to as the leaders to the downside.

We came into 2022 with a close eye on those Culprits (see here) and we've continued to monitor their declines.

If you haven't been following along, those groups include Chinese Internet, Biotechnology, the IPO stocks, and of course Cathie Wood's ARKK Funds, who have become the poster child for this latest bubble.

But a funny thing happened 6 weeks ago - they all stopped going down.

And the leader to the upside has been Chinese Internet (yes you read that right, I had to run the numbers multiple times to believe it myself).

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 Steven Strazza @Sstrazza and Ian Culley @Ianculley

One of the most important risk ratios and easily the biggest snooze fest from the past year is finally starting to move. 

That’s right – after going nowhere for more than a year, the Copper/Gold ratio is making a directional move! And believe it or not, it’s resolving in the opposite direction of interest rates.

Instead of following rates higher, Copper/Gold is rolling over to the downside and raising questions regarding risk appetite and overall market health.

And from the looks of today’s price action, Dr. Copper is breaking down on an absolute basis as well.

We can’t emphasize the importance of these developments enough. We’ve been awaiting resolutions of these ranges since early last year, and it’s finally happening.

Let’s talk about it.

Here’s an overlay chart of the Copper/Gold ratio and Copper futures:

From the desk of Steve Strazza @Sstrazza

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: