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. What remains is a list of stocks that large financial institutions are putting big money behind… and they’re doing so for one reason only: because they think the stock is about to move in their direction and make them a pretty penny.

The best lessons are learned the hard way.

That's just the way life goes.

One of the most important things I've come to understand about markets, and life, is that you have to worry about yourself first, you have to take care of your family first, and then you can go out and help others.

If your own house isn't in order, not only are you not able to help other people, but you may actually do more harm to them than good.

Depending on where you are in your life, that perspective may change. But in the market, as an investor, there are no exceptions!

You're only in it for numero uno.

Just to be clear, if you're in the market for ANY other reason other than to make a profit for yourself, then you are unbelievably confused.

Last Friday I had a nice little chat with the boys over at Benzinga.

It's funny because I've been doing this pretty regularly with these guys for almost a decade, which is kind of unbelievable to think about.

Shout out to Joel, Dennis and Spencer. Keep up the good work fellas!

During our chat we talked about relative strength and which individual stocks stand out in the current environment.

Check it out:

This is what happens when you ignore price just because you're too weak to overcome your ego:

Since every commodity on earth has been going up in price EXCEPT for gold and silver, perhaps that's just further information that gold and silver are NOT commodities after all, but actually just a couple of shitty currencies.

It's Saturday Morning Chartoons time. 

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.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

From the desk of Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 100 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’s got all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we’re developing a separate universe for that, and we’ll be sharing it with you soon.

So, The Hall of Famers is easy.

We simply take our list of 100 names and then apply our technical filters in a way that 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:

And here's how we arrived at it:

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

Whether we’re talking about stocks, commodities, currencies, or even the bond market, things have been a total mess. It’s no secret, and you’re probably tired of hearing it by now.

Trust me, we’re just as tired of seeing it.

So, as these choppy conditions test our patience and discipline, why not use this opportunity to take a step back and examine where we’ve come from, where we are now, and where we’re likely headed.

In today’s post, we’re going to do just that by revisiting and analyzing some of our favorite breadth indicators and discussing what some of them are suggesting for commodities over the long run.

Let’s dig into it!

First, we need to understand that a breadth thrust isn’t a singular event. It’s a process that builds upon itself as a new bull cycle unfolds.

These thrusts in participation don’t all just happen overnight. Instead, they develop over shorter time frames at first and eventually culminate with a broad expansion in new longer-term highs.

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

I was talking to the team earlier this week and mentioned that I was having a hard time writing. Grant and Ian were quick to remind me that it's probably because "nothing new is happening!"

They were right. Until now...

We finally got a major resolution in what we consider one of the most important charts in the world these days.

I'm talking about the US 10-year yield reclaiming that critical 1.40% level this week. And this begs the question as to what a rising rate environment might mean for investor portfolios.

Well, one thing we know for sure is we want to stay away from bonds... unless we're shorting them.

But how do we want to position ourselves in the stock market if yields are breaking out?

It's simple really. Some stocks do better with rising/higher rates, while others thrive in markets characterized by low growth and low yields. If this is the beginning of a fresh move higher for yields, then we want to be focused on buying the stocks that are likely to benefit the most.

High-beta stocks are hitting new multi-month highs relative to low volatility.

This is the opposite of what would be happening if the world was about to come to an end.

The ratio between High Beta stocks and Low Volatility stock basically stopped going up last February.

From the desk of Steve Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Considering the selling pressure in recent weeks, we were very excited to take a look at our breadth indicators today to see if we finally saw some downside expansion worth pointing out. Spoiler alert: There was nothing there.

Being as we're in a sideways market, we're always on the lookout for a change in character in internals that might suggest some resolutions are finally on the horizon. And since bears have been driving stocks lower since early this month, our focus is on new short-term lows. 

With the S&P experiencing some volatility and revisiting its 50-day moving average this week, did we finally get that "fall day?"

Two things we've been hitting on ad nauseam for over a quarter now are the consistent lack of new lows and the fact that most stocks have already corrected beneath the surface.

Today, we're going to revisit both of these key themes and see where we currently stand.

From the desk of Willie Delwiche.

On September 22nd, Sean and Strazza hopped on a Twitter Live Stream to discuss a recent trade idea for All Star Charts Options Members.

Here's the play:

"I like an $IWM November 200/205/235/240 Iron Condor for an approximately $1.80 credit. This means I’ll be short the 205 puts and 235 calls, while protected by the 200 puts and the 240 calls. This is a defined risk trade where the most I can lose is the maximum possible value of the spread (distance between short and long strikes — $5.00) minus the credit we receive at initiation ($1.80) which equals $3.20."

To learn more about the trade and the thinking behind it, click below to watch a replay of the Live Stream.