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.

The frustration we're seeing from permabears is at a whole 'nother level these days.

I don't need to name and names. You know who they are. They've been calling the top since the last top. It's what they do.

They claim the system is broken. They cry that nothing matters anymore.

And to be clear, it's not that 'nothing' matters.

It's just that the things the market cares about, are NOT the things you think it should care about.

We're selling a $NVDA February 260/240 Bull Put spread for an approximately $4.75 credit. This means we’re in the regular February monthly expiration options and we’re short the 260 puts and long an equal amount of 240 puts to define our risk.

Check out our short video with the thought process behind these trades:

The V-Bottom is back! (At least as of the time of this writing). What a bounce stocks have seen off Monday's nadir.

Have we stuck the landing and its back to new all-time highs for the broader indexes soon?

Time will tell. But the short term bet we're making today is that Monday's low will hold at least for a couple weeks. And today's trade in a leading stock in a leading sector reflects this stance. When in doubt, stick with the strongest names in the strongest sectors, right?

So that's brings us to Nvidia $NVDA.

Remember that Bitcoin crash in early December?

That was fun wasn't it?

The comparisons to 1987 in the S&P500 were too similar to ignore.

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

There's been a subtle risk-on tone in recent weeks. With each passing day, it's been spreading to more and more markets and charts.

Rates are rising around the globe. The underlying uptrend in commodities is intact and looks ready for another up leg. Our equal-weight commodity index is resolving higher from its current range. And cyclical stocks such as energy and financials are breaking out to new highs.

All of these events speak to a growing risk appetite and support higher prices for risk assets.

Although, two areas where we aren't seeing such clear evidence that risk-seeking behavior is re-entering the market would be currencies and our intermarket ratios.

The AUD/JPY cross is still stuck within a range. High-yield bonds $HYG relative to their safer alternatives -- US Treasuries $IEI -- failed to hold their recent highs. And the copper/gold ratio is a hot mess.

We would expect to see decisive upside resolutions from these charts if investors are positioning for another leg higher.

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

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 Steve Strazza @Sstrazza.

Welcome to our latest Under the Hood column, where we'll cover all the action for the week ended January 7, 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've been talking a lot about the differences between Nasdaq stocks and how other indexes are weighted.

With the Nasdaq running up into key resistance vs the S&P500, confirming a bearish momentum divergence, I think it's important to reiterate why:

Do you think the world is coming to an end if Financials are breaking out to new all-time highs?

The answer is no.

If America's most important sector is leading the way higher, then that probably speaks to more continued rotation, not massive distribution.

Sure, some sectors are getting hit.

Some sectors got hit last year too. Most of them did at some point actually.

But if you recall, when some stocks were struggling, there was always another group coming in to pick up the slack.

In this case, it's arguably the world's most important sector: