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

Commodities are making a fresh leg higher, and energy is leading the way.

Crude oil is back above our risk level around 76. And the energy-heavy CRB Index is at its highest level in more than seven years.

But it’s not just energy contracts that are working right now. We’re seeing strength across all areas of the commodity complex.

This broadening participation is evident in our equal-weight commodity index, which just hit new highs after consolidating for the past two quarters.

This chart shows the CRB Index and our equal-weight index side by side:

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:

From the desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as a market of stocks.

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club. We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports. Now, we’re also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

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

There's been a subtle risk-on tone in recent weeks. With each passing day, it's been spreading to more and more markets and charts.

Rates are rising around the globe. The underlying uptrend in commodities is intact and looks ready for another up leg. Our equal-weight commodity index is resolving higher from its current range. And cyclical stocks such as energy and financials are breaking out to new highs.

All of these events speak to a growing risk appetite and support higher prices for risk assets.

Although, two areas where we aren't seeing such clear evidence that risk-seeking behavior is re-entering the market would be currencies and our intermarket ratios.

The AUD/JPY cross is still stuck within a range. High-yield bonds $HYG relative to their safer alternatives -- US Treasuries $IEI -- failed to hold their recent highs. And the copper/gold ratio is a hot mess.

We would expect to see decisive upside resolutions from these charts if investors are positioning for another leg higher.

From the desk of Steve Strazza @Sstrazza

Dividend Aristocrats are easily some of the most desirable investments on Wall Street. These are the names that have increased dividends for at least 25 years, providing steadily increasing income to long-term-minded shareholders.

As you can imagine, the companies making up this prestigious list are some of the most recognizable brands in the world. Coca-Cola, Walmart, and Johnson & Johnson are just a few of the household names making the cut.

Here at All Star Charts, we like to stay ahead of the curve. That’s why we’re turning our attention to the future aristocrats. In an effort to seek out the next generation of the cream-of-the-crop dividend plays, we’re curating a list of stocks that have raised their payouts every year for five to nine years.

We call them the Young Aristocrats, and the idea is that these are “stocks that pay you to make money.” Imagine if years of consistent dividend growth and high momentum and relative strength had a baby, leaving you with the best of the emerging dividend giants that are outperforming the averages.

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 Under the Hood column, where we'll cover all the action for the week ended January 7, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.

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.

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.

Commodities Keep Cruising

Despite copper remaining range-bound and the CRB index stuck below its October highs from last year, our equal-weight commodity index hit fresh 8-year highs last week. This speaks to broad participation and strength among commodities, and is supportive of our view that a new commodity supercycle is upon us. This index making new highs is also excellent confirmation of the breakouts in the US 10-year yield, and energy and financial stocks. We think these areas of the market will continue to do well. Though we’re definitely not out of the woods, we are beginning to see signs that the market is finding its way. Our equal-weight commodity index at its highest level in eight years is definitely one for the bulls. After a prolonged period of consolidation in 2021, we think commodities are ready to make a fresh leg higher.

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 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 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.

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

Crude oil bulls are back in town!

They kicked the year off by pushing price back above 76 and reclaiming the upper bounds of a multi-year base. Oil is the most important commodity in the world, so it’s hard to overstate just how bullish fresh seven-year highs would be. 

But we’re not quite there yet. We still need to take out the fall highs. 

The 76 level marks the former 2018 highs and the breakout from a massive reversal pattern. Buyers ran into an overwhelming amount of supply here during the back half of 2021. When they did manage to reclaim those former highs, it was short-lived, and the move quickly failed. 

But the move was more of a false start than a failed breakout. We’re back above this level again today.

Now that the bulls are back in the driver’s seat, can we expect to finally see crude oil at 100 in the coming weeks or months?

It’s very possible -- especially given one key development in recent weeks…  

From the desk of Steve Strazza @Sstrazza

The most speculative areas of the market peaked in Q1 of 2021 and have been under pressure ever since. It’s not just IPOs and SPACs. Areas like biotech, social media, and online retail have completely fallen out of favor too.

Many of the stocks that have been selling off were among the top performers off the COVID lows in 2020. Some of these former leaders are in 60% to 70% drawdowns today.

What a difference a year can make!

Now that we’re getting closer and closer to the first rate hike, the prevailing opinion seems to be that these stocks will remain under pressure. As things currently stand, there's not much on the charts to suggest they're ready to turn things around.

On the other hand, some of these industry groups are already more than 30% off of their highs -- and that’s at the index level. Eventually, further downside would be inconsistent with the idea that stocks are in a bull market.

For the health of the overall market, we want to see these stocks stop selling off so aggressively. Despite the volatility this week, there are some signs that this is happening.