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How To Use Repeatable Setups To Gain a Trading Edge

March 2, 2022

As a trader, it's your job to find an edge.

There's quite literally an infinite amount of strategies, systems, and indicators you can integrate into your process.

But, at the end of the day, mastering just a select few will likely generate alpha as opposed to creating inconsistency in your approach.

Think about it: If you go to the gym, you have a structured program. You don't go to the gym and aimlessly decide on random exercises. You have a rigid plan that you're going to build on top of the lifts you did the workout before.

Trading's the same.

You don't need to switch between every time frame, make every decision using a different indicator from the last, or follow someone else with different objectives from yourself into our trade.

You find repeatable setups where you can find your edge.

For instance, you may only trade in the aftermath of liquidity cascade events that take place a handful of times every year. Mastered well enough, a few well-calculated trades in similar conditions can make your entire year.

In day-to-day life, being a "Jack of all trades, master of none" might serve you well.

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How To Trade the Euro's Lows

March 1, 2022

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

Currency markets are reacting to the war that’s broken out in Europe.

In the past four trading sessions, the Russian ruble has dropped more than 1,000 pips against the US dollar.

And, with fear growing that these initial days of fighting will turn into a protracted conflict, weakness is striking the euro as well.  

Let’s take a look at the EUR/USD cross and outline the levels we’re monitoring in the coming weeks and months.

Here's a daily chart of the EUR/USD going back to the pandemic lows:

After completing a large distribution pattern last September, the EUR/USD pair has been consolidating for the past several months and trading in a range between 1.1483 and 1.1121.

Rising Commodity Costs: Do You Complain or Rejoice?

March 1, 2022

As investors we get the option.

You can either profit and help your family because of higher energy and commodities costs.

Or you can complain about it.

I've been through enough cycles at this point, that there will always be that group who just complains and complains.

But for those of you who are proactive, and took advantage of the trends in place, then there's really nothing to complain about.

To the contrary, these are great days! Some of the best days, in fact.

It's funny, because you have those people who bought into that scam of so called "passive" investing. It's ridiculous that some investors still fall for that old trap.

Just because you buy and hold major indexes doesn't make you a "passive" investor. You have to be really really really bad at math to believe that.

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The Minor Leaguers (02-28-2022)

February 28, 2022

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.

We recently decided to expand our universe to include some mid-caps…

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.

The way we did this is simple…

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

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Follow the Flow (02-28-2022)

February 28, 2022

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.

3 Uptrends Worth Watching

February 28, 2022

If the world was coming to an end, and stocks all over the world were about to collapse, then these 3 charts would likely not be going up.

If the argument is that the relentless selling was limited to overexposure in US Growth Stocks, then these 3 charts should continue to rise.

The first one is Berkshire Hathaway. Tell me this isn't an uptrend:

The worst stocks on earth are near old support

February 28, 2022

It's hard to ignore the fact that some of the worst stocks on the planet are near old support levels.

One group that stands out for sure are the Marijuana stocks. We've seen a ton of activity from C-suite executives buying their own company's stocks recently. And not just exercising options, but going out in the open market and buying the stock just like you or I would.

Look at the Alternative Harvest Index Fund all the way down to those former lows from early 2020:

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[Premium] Details For March 2022 Monthly Strategy Session

February 26, 2022

These are the registration details for our Live Monthly Candlestick Strategy Session for Premium Members of All Star Charts.

This month’s Video Conference Call will be held on Tuesday March 1st @ 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Tuesday evening:

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These Trends Deserve a Breather

February 25, 2022

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

Commodities have been on a tear to start the year.

The CRB Index is up almost 16% year to ate, while our equal-weight commodity index is up 9.5%.

But, with such explosive moves over the past few months, we think it might be time for some corrective action.

Our commodity indexes and a handful of individual contracts are now testing potential resistance levels.

Though we still think this bull market has plenty left in the tank, it’s starting to look like commodities are due for a break over the short term.

Let’s discuss some of these charts now.

First up is the CRB Index:

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Better Opportunities Abroad

February 25, 2022

From the desk of Steve Strazza @sstrazza

We've been joking internally that the new highs list is a lot longer when you include ADRs.

As US stocks come under increasing pressure and the rotation into value becomes more pronounced, international stocks are garnering some well-deserved attention.

We recently wrote about some of our favorite regions around the world and discussed bullish setups in a handful of international country ETFs, with a heavy tilt toward value.

We also have a bi-weekly scan where we focus exclusively on the largest ADRs, which are just foreign companies listed on US exchanges. It's called the International Hall of Famers, and you can check it out here.

The only problem with it is that a lot of the cyclical stocks that are showing leadership have smaller market capitalizations, and our universe is focused only on large caps.

As such, we thought we'd run a scan to identify some of the strongest international stocks between a market cap of $1B and $35B.