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

Last week, we asked the question...is it time for a dollar bounce?

And the market quickly answered with a resounding, YES!

We’ve highlighted several currency pairs challenging crucial levels of support and resistance. Last week, we saw the USD take control at those key levels. 

Both the EUR/USD and GBP/USD turned away from critical areas of former support turned resistance. The USD/CAD moved sharply higher from a major area of support. The AUD/USD broke back below a key retracement level after consolidating for the first half of the year. And the NZD/USD retreated from an area of overwhelming overhead supply.

From the desk of Steve Strazza @Sstrazza

As always, thanks to everyone who participated in last week’s mystery chart.

Responses were mixed but skewed in the bearish direction.

The point of our exercise was to question whether buyers would have the power to push prices back above our risk level… or if sellers would follow-through and validate the pattern breakdown.

If the former was to be true, we’d have a “bull-hook” formation on our hands. Some might call it a “bear-trap”. Either way, it’s bullish.

But that’s not what has happened at all. Since our mystery post, sellers have taken control as prices continued to collapse lower. 

We’re now looking at a decisive violation of our risk level. Let’s dive in to see what’s really going on and discuss why this chart is so important!

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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.

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've already had some great trades come out of this Smallcap-focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."

To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.

It's Saturday Morning Chartoons time. You can read more about the reasoning behind this post here. 

We're just interested in aggregating all of the charts we put together throughout the week and organizing them all into one, easy to flip through deck.

One thing that stood out to me this week was this table of new highs and new lows. It's a great way to visualize what's going on underneath the surface:

I also see here how investors have way too much exposure to stocks, compared to historical measures. We're seeing this in other sentiment data too.

But here's the Household Asset Allocation Stocks vs Bonds ratio:

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

Whether you trade commodities or not, it’s been impossible to ignore the recent sell-off in Lumber, as prices have collapsed almost 30% in just the last month.

We pointed out in May that Lumber was due for a digestion of its recent gains.

Well, let’s just say we got a lot more than that! Sometimes markets correct or consolidate through time, and sometimes they correct through price.

And Lumber is most definitely correcting through price!

But Lumber is not the only procyclical commodity to enter a corrective phase. More recently, DR. Copper has begun to digest its recent gains through price as well.

These corrections have already done some damage to the primary uptrends at play as both of these economically sensitive commodities have recently violated critical support levels.

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

We’ve pounded the table about historic breadth thrusts since we first saw these readings start to pop up in early June of last year.

It's now a year later, and we're still seeing them... In fact, the S&P 500 recently registered its highest percentage of new 52-week highs in history - absolutely crushing the historic reading we saw in Q4 of last year.

So, why is this important?

These extreme readings are as bullish as it gets and are a very common characteristic of the early innings of a fresh bull market. It's as simple as that, right?

Well, yes... But, not exactly...

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

Thanks to everyone who participated in last week's mystery chart.

We asked whether this chart had the momentum to finally reverse course and break loose from the grips of its primary downtrend.

The responses were mixed, with many wanting to wait for more information... In many cases, looking for confirmation of the impending breakout.

Well, not much has changed as the chart has yet to make a decisive move from this key level.

The chart was a weekly candlestick view of the MSCI Frontier Markets ETF $FM.

Let's dive in and see how we want to play this index comprised of stocks from some of the least developed countries around the world.

These are the registration details for our live monthly conference call for Premium Members of All Star Charts.

This month’s Conference Call will be held on Tuesday June 22nd at 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 night:

We're going to start taking full advantage of the data coming out of our weekly Follow the Flow report and put on at least one actionable trade from this list every week. If you're not already familiar with this report, Steve Strazza puts it together each week and it highlights stocks with both unusual options flow plus interesting chart setups. Combined, these two factors offer traders a pretty unique edge to exploit.

Today's idea is in a recent IPO which might offer us some additional oomph if it gets moving in our direction.

From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

And at present, markets are a total mess and full of mixed messages as most major stock market indexes continue to churn sideways in consolidation patterns, while many risk-on commodities are in corrective phases.

From the desk of Steven Strazza @Sstrazza 

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So, let us know what it is… Buy, Sell, or Do Nothing?