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 small-cap-focused column since we launched it late last year 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 about a year now, we’ve focused only on Russell 2000 stocks with a market cap between $1 and $2B. That was fun, but we think it’s time we branch out a bit and allow some new stocks to find their way onto our list.

The way we’re doing this is simple…

This week we’re looking at a long setup in the Auto sector. We're seeing strength come through in the Auto segment and thought of taking a look at a stock that's ripe for a bullish move.

Let's take a look at this stock.

One of the first things you learn in Technical Analysis is that markets are fractal.

That means that you'll find the same human behaviors (i.e. price patterns) whether you're looking at daily timeframes, weekly time frames or even intraday (e.g. 10-min or 30-min candles).

This is a concept that Brian Shannon has done an amazing job of highlighting throughout his career. Brian has been an inspiration to me since about 2005, which is pretty unbelievable to think about. Since then we've become friends and go skiing together and all that. It's pretty cool how life works sometimes.

Anyway, the idea behind "Multiple Timeframes", which is literally part of the title of Brian's book (go buy it), is to use this reality of "markets being fractal" to our advantage.

That can mean a lot of different things to different people.

For us, in what we do here at All Star Charts is, we start with Weekly and Monthly time horizons. That's where it all begins.

We've been discussing Covid for so long now, that it feels as though it's been going on forever. It carried out massive damage across different segments. But we are now seeing a resumption in trends that have been in place long enough to call them trends.

As we know, travel had been largely affected by the pandemic. Getting out of the house to buy groceries became the new travel plan! But not anymore!

We're now witnessing a strong and consistent pick-up in flight and hotel bookings which means that we can start taking a look at the shares that belong to these categories as well!

So let's do just that.

First up, let's take a look at the custom Leisure Index that we track at ASC.

As can be seen from the chart below, the custom Leisure Index is at a crucial level. Currently trading close to its 2019 highs, the index seems ready to break out soon. And why is it that we think so?

Because there are signals that are coming through from the constituents of the index that suggest so.

Click on the image to zoom in.

One thing unique about the market is that the game is never over. There aren't four 15-min quarters or two 20-min halves like in sports.

In those endeavors there is a beginning and an end.

You know who won (or who tied in some cases). But the match is over, and there will be another one in a few days or a few months, depending on the sport.

In the market, it never ends. This can cause issues psychologically, so it's something we should all be aware of and keep in mind.

But if you ask me, currently the bulls are scoring a lot more points. This is the first time we've seen that since Q1 this year, when the bears started running up the score.

Look at the S&P500 break out to new all-time highs relative to US Treasury Bonds.

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

Commodities have been on an absolute tear, with our Equal-Weight Commodity Index up almost 40% over the trailing year. 

But ever since Q2, the vast majority of the space has been chopping sideways along with most cyclical assets. 

Sounds a lot like stocks, doesn’t it? And while we’re still yet to see any major resolutions from equities, we have seen some bullish developments in the commodities market of late.

Energy asserted itself as the new leadership group with a series of major breakouts. Both crude and heating oil broke to new six-year highs, while gasoline futures completed a seven-year base. 

Then there’s natural gas, which gained more than 25% during the trailing month and tested its 2014 highs just above 6.

The emerging leadership from energy comes as no surprise, as we noticed signs of relative strength last month.  

Now that it’s here, what are the implications for the rest of the commodity space and global risk assets?

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

Back in August, we presented two opposing views of the relationship between stocks and bonds.

The question was, after running into resistance at a key extension level, in which direction would the $SPY/$TLT ratio resolve?

Would stocks break higher relative to bonds, in the direction of the underlying trend?

Or would the ratio roll over in favor of bonds? It would certainly be a logical level for a trend reversal...

Fast forward two months, and we finally have our answer.

Turns out it was the former -- stocks are breaking higher relative to bonds. Here's a look:

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

Using the S&P 500 as your investment proxy, you’re probably happy with your returns so far this year.

That's even with the 5% pullback we finally saw last week -- the first 5% pullback for the S&P 500 in 2021, and it took 229 trading days.

But the averages aren’t telling the whole story. Some stocks are going up, but most are not. We've been pounding the table about this for months already, and it's been the main theme during the first three quarters of the year.

Unless you’ve been living under a rock, you already know the current environment is an absolute mess, as the weight of the evidence continues to hang in the balance.

In this post, we’ll show you why the S&P 500 is not the stock market and the stock market is not the S&P 500. 

When we analyze equities as a “market of stocks” rather than “a stock market,” it becomes clear that we're in the thick of a correction that started as early as Q1.  

Here at All Star Charts, we like to call this a stealth correction!

We debuted a new scan recently- The Outperformers.

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.

On this episode of the podcast, Steve Strazza and I sit down with Brian G, who many of you will recognize as @AlphaCharts on Twitter.

I've been following Brian for many years and love a lot of the work he puts out. It was really fun hearing his story about how he became a technician.

It isn't something that happens overnight, that's for sure. It's a process.

First we get into the evolution of become a Technical Analyst, and then we dive into what we're doing about it in the current environment.

Hope you enjoy!

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

We held our October Monthly Strategy Session last night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month. 

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.