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:

• This week, our macro universe was green as 60% of our list closed higher with a median return of 0.44%.
• Lumber $LB was the winner, closing with a 3.34% gain.
• The biggest loser was Emerging Markets $EEM, with a weekly loss of -2.81%.
• There was a 9% gain in the percentage of assets on our list within 5% of their 52-week highs – currently at 26%.
• 21% of our macro list made fresh 4-week highs, 9% made new 13-week...

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

Commodities have been on a tear to start the year.

The CRB Index is up almost 16% year to ate, while our equal-weight commodity index is up 9.5%.

But, with such explosive moves over the past few months, we think it might be time for some corrective action.

Our commodity indexes and a handful of individual contracts are now testing potential resistance levels.

Though we still think this bull market has plenty left in the tank, it’s starting to look like commodities are due for a break over the short term.

Let’s discuss some of these charts now.

First up is the CRB Index:

The benchmark commodity index is running into an area of former support at the 2012 and 2014 lows, coinciding with a key Fibonacci retracement level measured from the 2011 peak to the 2020 lows.

The CRB Index has been on a tear, posting 10 straight weeks of higher closes....

From the desk of Steve Strazza @sstrazza

We've been joking internally that the new highs list is a lot longer when you include ADRs.

As US stocks come under increasing pressure and the rotation into value becomes more pronounced, international stocks are garnering some well-deserved attention.

We recently wrote about some of our favorite regions around the world and discussed bullish setups in a handful of international country ETFs, with a heavy tilt toward value.

We also have a bi-weekly scan where we focus exclusively on the largest ADRs, which are just foreign companies listed on US exchanges. It's called the International Hall of Famers, and you can check it out here.

The only problem with it is that a lot of the cyclical stocks that are showing leadership have smaller market capitalizations, and our universe is focused only on large caps.

As such, we thought we'd run a scan to identify some of the strongest international stocks between a market cap of $1B and $35B.

...

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:

And here’s how we arrived at it:

• We filtered out any stocks that are below their May 10th 2021 high, which is when new 52-week highs peaked...

US Treasuries are off to their worst start in more than a decade as rates rise across the curve. 

The US Aggregate Bond ETF $AGG is down more than 4% year to date. Treasuries can’t manage to catch a bid. And High-Yield Bonds $HYG have fallen off a cliff.

But this could all change quickly. Especially if stocks continue to sell off. 

Money has to go somewhere as it flows out of equities. And with many bonds testing critical levels, it would make sense to see prices mean revert, at least in the near term.

Let’s take a trip around the bond market and discuss some of the key levels on our radar.

First up is the long duration Treasury Bond ETF $TLT:

After dropping 5.4% in the last three months, TLT has paused at a logical area of former support around 135. This the same level price rebounded from late 2019 and early 2021.

The last time TLT bounced off these levels was when many risk assets peaked back in May of last year. We’re watching to see if we get a similar reaction from markets this time around.

...

From the desk of Steve Strazza @Sstrazza

How about that volatility!?

I don't know about the rest of you, but days like these make me grateful that I get to do this for a living.

The Nasdaq 100 $QQQ opened the day down over 3% and closed up over 3%. The last time that happened was November of 2008.

How's that for excitement?

Intraday reversals and wide ranges are normal during periods when volatility grips the market the way it has so far this year.

But today was different than the other tumultuous sessions we've encountered in recent months. We're finally seeing some strong evidence of a bottom.

Let's talk about it.

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.

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From the desk of Steve Strazza @Sstrazza

We held our February Mid-Month Conference Call on Tuesday. ASC Premium Members can click here to review the recording and the slide deck.

In this post, we’ll summarize the call 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 Steven Strazza @Sstrazza and Ian Culley @IanCulley

Despite the trendless nature of the major forex pairs, there’s still plenty of information coming from the exotics right now – particularly emerging market currencies.

The Chilean peso – and its relationship to copper – now has our attention.

Let’s take a look.

Here’s a chart of the USD/CLP cross overlaid with Copper Futures $HG_F with a correlation study in the lower pane: 

Chile is the world’s largest copper producer, which explains the strong negative correlation between the USD/CLP pair and the price of copper.

You can see this relationship in the chart, as USD/CLP tends to peak and roll over at the same time copper bottoms out, and vice versa. 

The USD/CLP now appears to be topping and turning lower after finding resistance at its 2020 highs. USD/CLP also peaked at these levels after the COVID crash, which coincided with the start of copper’s rally to new all-time highs. ...

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest Under the Hood column, where we'll cover all the action for the week ended February 18, 2022. This report is published biweekly 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.

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.

Watch this video for a behind-the-scenes look at our process.

Whether we’re measuring increasing interest based...

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.

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...

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.

Industrials Are On The Ledge

Industrials are currently trading at their lowest level in over 10 months. In the large cap space, there are lots of charts that are still consolidating in the very same ranges they’ve been in since the first-half of last year. Both cap-weighted and equal-weight industrials fall into this category. In order to turn bullish on the broader market, we need to see more areas resolve these ranges to the upside. But in order for that to happen, they need to hold the lower bounds of these patterns in the meantime. As the list of sectors and industry groups that are resolving lower grows, it becomes easier to make a bearish argument for stocks as an asset class. Seeing industrials break down would also be a major development due to their high correlation with the S&P 500. The bottom line is that these ranges need to hold, otherwise we’re likely headed for an environment where the overall...