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

We discussed:

• The average stock down 30-45% depending on the exchange
• Most consecutive weeks of more new lows than new highs since 2008
• How will US Dollar near former highs impact stocks
• Energy Stocks & Commodities at a Critical Juncture
• Major Bond Futures Contracts at Key Support: 2s, 5, 10s & 30s
• Consumer Discretionary the worst performing sector
• New Short Ideas in Growth
• Stocks Showing Relative Strength bucking the trend
• International weakness - stocks are below overhead supply
• Commercial Hedgers continue to buy Energy Futures
• Precious metals underperforming stocks and commodities
• Chilean Lithium continues to shine
• Agriculture stocks and commodities still trending higher
• A look into some recent insider transactions
• Crypto at key support levels, similar to the bond market

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

Bonds are digging in at some familiar levels.

For years now, we’ve pounded the table about the importance of the 2018 highs for various risk assets.

That’s because those former highs marked significant peaks for both the stock market and certain procyclical commodities and currencies during the last cycle.

As far as the bond market is concerned, 2018 was also when yields peaked. Benchmark rates in the US are testing these old highs.

As such, it’s not the 2018 highs but the 2018 lows that we’re paying attention to when analyzing the prices of Treasuries.

A handful of bonds and bond funds are trying to find a bottom at these key former lows right now. 

Let’s take a look.

Here’s a chart of the 20+yr T-Bond ETF $TLT:

From the desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as a market of stocks.

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club. We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports. Now, we're also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

Below 4100 in the S&P500 is a problem. Those are the February lows.

By definition, the stock market is in a downtrend, making lower lows along with those lower highs that were already in place.

We can go much lower from here, a little lower from here or sideways for while.

It doesn't make sense to own stocks in any of those 3 scenarios:

The team at All Star Charts lately has been talking about how a lot of stocks are displaying declining moving averages and share prices continue to trade below these downward-sloping moving averages. There is nothing bullish about that.

What it means is there is likely an avalanche of overhead supply in most areas of the stock market right now and therefore many rallies will be met with more and more people trying to unload their positions. This is a tough environment to be a bull in.

There is always money to be made in bear markets, but it requires a different skillset, steel nerves, and quick decisions. And whereas in bull markets, we love to put on bullish positions that have 6-9 months to play out so that we can let the underlying trends grind their way higher, in bear markets we like to take more shorter-termed positions because we need to take profits quicker. Bear market rallies are notorious for stopping out even the best of short positions.

With all this in mind, today's trade is in one of those names that have been in a persistent downtrend, and is trading below significant moving averages.

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

Copper is challenging the lower bounds of its range.

The AUD/JPY is attempting to reclaim former support.

And the S&P 500 is digging in at the AVWAP from its COVID lows.

These are some of the most important charts and levels in the market right now. 

But there’s one chart that tops them all… 

In our view, the US Dollar Index $DXY is the key to this market. 

It’s currently struggling to resolve higher from a multi-year base after reaching its highest level since 2002.

The breakout could stick and lead to a sustained uptrend. Or, it might fail. Either way, the outcome will have wide-ranging impacts on risk assets.

If the breakout from this multi-year double bottom is a valid one and the dollar continues to trend higher, we’ll continue to see downside pressure for the majority of risk assets.

From the desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That's why we're turning our attention to the future aristocrats.

In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we're curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are "stocks that pay you to make money."

Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest Under the Hood column where we'll cover all the action for the week ended May 13, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names.

There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

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.

From the desk of Louis Sykes @haumicharts

It's been almost a joke at this point to cover Bitcoin from an analytical perspective when it's been nothing but representative of the Nasdaq, US growth stocks, and long-duration assets in recent months.

People often ask what it'll take for correlation to macro to die out.

Here's a take.

Bitcoin has its whole separate supply dynamics taking place on-chain away from macro.

The reality of the situation is that there's a small group of highly sophisticated traders utilizing perps and the traditional calendar futures market in great size bounding price action to the US indices. But under the surface, there's a new group of investors and a cohort of preexisting ones that are laying down support.

Zhu Su of 3AC likens it to a supply "gentrification" to convicted crypto natives, institutional buyers, and HNW individuals, that when complete will see a significant dislocation between equity markets and Bitcoin. The price action of the last week is an extreme example of this transfer.

Over the years investors have come up with new and creative ways to lose money in the market.

But Silver just keeps helping investors do it the old fashioned way:

As you can see, Silver is down and making new 52-week lows.

And this brings up a bigger question.

The market is not a children's book.

I know sometimes we all kind of wish it was.

But it's not.

As investors, we can approach the market pretending it's one way, or we can approach it knowing it's the other.

That's up to you.

For us, we never even think about who is on the other side of our trades.

Why would we?

But it's something that's come up recently and probably worth addressing.