From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended June 23, 2023.

This report is published bi-weekly and rotated with The Minor Leaguers.

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 and Alfonso Depablos @Alfcharts

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.

From the Desk of Ian Culley @IanCulley

Buyers are holding the line. 

The former 2011 highs remain front and center for gold futures – and all precious metals.

These shiny rocks will experience increased selling if gold slips back below those former highs marking the prior commodity supercycle peak. 

Silver, palladium, and the Gold Mining ETF $GDX are already printing fresh lows. And new multi-month lows for the silver/gold ratio indicate dwindling risk appetite.

These aren’t the type of developments that support a sustained uptrend.

Yet this action hasn’t deterred gold bugs.

Despite every reason to sleep in and shirk any and all responsibilities, they continue to show up right on time…

What if we don't own enough Bitcoin?

Have you thought about that?

What if BTC is trading back above those Summer 2021 lows?

What is the risk of NOT owning enough Bitcoin?

That's what I think about.

Here's what the chart of BTC looks like as all that former support throughout 2021 has turned into resistance in 2023:

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.

From the Desk of Ian Culley @IanCulley

The commodity supercycle will not be televised.

Jim Cramer will not provide commentary on cotton, cattle, and/or the crack spread.

Hollywood will not make a movie on crude oil trading below zero.

Nor will jeera futures have their turn in the limelight.  

That doesn’t mean we should plug in, turn on and cop out.

Instead, let’s focus on the charts…

Here’s the S&P 500 versus the CRB Index, a simple stocks/commodities ratio:

It’s been commodities over stocks since crude traded below zero in the spring of 2020.

Yes, the correction favoring stocks off the 2022 lows has been significant.

But it’s retreating from a logical confluence of potential resistance – a multi-year downtrend line and a key retracement level. 

From the Desk of Ian Culley @IanCulley

Investors are bidding up growth names.

Perhaps it comes as a surprise, given elevated interest rates.

It did catch me off guard, but it hasn’t stopped me from taking advantage of the developing trend.

I’m not the only one noting the peculiar divergence between rates and tech stocks.

Todd Gordon cited a persistent rise in rates as a potential headwind for the growth trade during Friday’s episode of The Morning Show.

(If you haven’t watched his segment, check it out here.)

One of the charts he shared on the subject has also been on my radar…

Here’s the overlay chart of the US 10-year yield and the Small-Cap Value ETF (IWO) relative to the  Small-Cap Growth ETF (IWN):

From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.

We’ve also sprinkled in some of the largest ADRs from countries that did not make the market cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It’s got all the big names and more--but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let’s dive in and take a look at some of the most important stocks from around the world.

Here’s this week’s list:

From the desk of Steve Strazza @Sstrazza

Tuesday night we held our June Monthly Conference Call, which Premium Members can access and rewatch here.

In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we've been working on internally is using various bottoms-up tools and scans to complement our top-down approach. It's really been working for us!

One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn't just end there.

We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.

From the Desk of Ian Culley @IanCulley

Dollar bulls, be warned!

The US Dollar Index $DXY is sliding toward the lower bounds of a multi-month range. 

Yes, it’s still a sideways mess. And it will remain a mess as long as its former support level holds.

But based on the most recent data, my money is on a downside resolution for King Dollar.

Especially when I consider last week’s breakout in Canadian dollar futures…

Besides the DXY trading below 101, I’ve monitored two key data points for confirmation of continued dollar weakness:

• the euro trading above 1.08, as it constitutes over 57% of the DXY (though recently it’s challenged a 1.10 handle); and
• commodity currencies, including the Australian, Canadian, and New Zealand dollars, reclaiming their respective July pivot lows.

It’s difficult to imagine the DXY ripping higher if its dominant component is completing a bearish-to-bullish reversal. Which the euro is.

Check.