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

Despite the rising US Dollar Index, strength among commodity-centric currencies has been a key theme for much of this year. 

Today, that’s no longer the case.

The rally in the USD is accelerating, as dollar strength broadens to even the most resilient currencies. 

Two of the top commodity currencies – the Australian and Canadian dollars – are undercutting the lower bounds of their current ranges and making fresh 52-week lows.

These breakdowns mean the path of least resistance is now lower. If these are valid resolutions, we’re looking at increased headwinds for risk assets.

Let’s look at a couple charts of the AUD and the CAD, highlight the levels we’re watching, and discuss what continued weakness in these major currencies means for stocks and commodities.

First up is the Australian dollar-US dollar cross:

The most significant insider transaction on today’s Hot List is a Form 4 filing by the CEO of Uber Technologies $UBER, Dara Khosrowshahi.

The Silicon Valley executive revealed a purchase of roughly $5.3 million of his own stock.

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 Minor Leaguers report.

We’ve had some great trades come out of this small-cap-focused column since we launched it back in 2020 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 the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

The way we did this is simple…

To make the cut for our new Minor Leaguers list, a company must have a market cap between $1 and $4B.

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Losing Value

Markets have been selling off indiscriminately since last week. Even the strongest stocks are under pressure as we're seeing more and more indexes resolve lower from distribution patterns and violate critical support levels. An excellent example of this is the small cap value ETF (IWN). IWN has successfully defended its range lows for the past several months as its peers have broken down. Now that it has resolved to the downside too, we can add it to our growing list of completed tops. If the strongest can't survive and hold their levels, what does that say about the rest of the market? Long story short, this action is not bullish.

Warren Buffett’s Berkshire Hathaway $BRK.A revealed more buying in Occidental Petroleum $OXY late last week.

In its latest 13G, the company reported a 21.6% ownership stake, which is roughly double its initial investment from earlier in the year.

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

A few weeks ago, we pointed out widening crack spreads and what they meant for oil refining stocks. You can read more here, as we explain how wider crack spreads support higher prices for this particular area of the market.

Three weeks later, crack spreads have widened to their highest level in more than a decade.

This post is not about crack spreads, though. It’s about energy and how everything in the space is working these days. 

Bullish rotation continues to be the theme for energy.

This week, gasoline was the standout, booking a 10% gain and breaking out of a massive base to new all-time highs.

Let’s take a look at the breakout in gasoline futures and discuss what it means for crude oil.

From the desk of Steve Strazza @Sstrazza

Our Hall of Famers list is composed of the 150 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 has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so 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:

The largest insider transaction on today's list comes to us in a Form 4 filing by Warren Buffett’s Berkshire Hathaway $BRK.A.

Buffett continues to grow his position in Occidental Petroleum $OXY. He just revealed an additional purchase that brings his total ownership to 226 million shares, representing a 12.15% interest.

From the desk of Steve Strazza @Sstrazza

Stocks are having a tough time these past few weeks. Selling pressure is not just accelerating; it’s spreading.

Even the leaders aren’t providing shelter from this latest storm…

A lot of the commodity stocks we’ve been focusing on for long exposure in recent months are experiencing significant volatility and are now back below our risk levels.

We want to be patient and wait for the dust to settle for most of these trades.

While this is the case for the majority of stocks right now, there are always pockets of strength.

The most obvious among them right now is energy. The resilience from energy continues to impress us.

Today, we’re going to outline long ideas in a popular exploration & production name as well as an international bank stock.

Let’s get to it.

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

While most uptrends have come under pressure in 2022, the US dollar has remained as strong as any.

This dollar strength, particularly at the index level, is nothing new. We've been discussing it.

It's been taking place all year, driven by the major pairs such as the euro, the yen, and the pound.

However, something new is the burgeoning strength beneath the surface, even outside of the big developed market currencies. We've been seeing dollar internals improve drastically in recent weeks.

And now we're seeing momentum accelerate for the US Dollar Index $DXY. Today, DXY is on track for its largest single-day gain since the pandemic crash more than two years ago.

All of the evidence suggests this dollar strength is the real deal.

Let's talk about what it means and how we want to position for it.

Here's the US Dollar Index ripping to its highest level in almost 20 years: