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

A revolution in energy is upon us.

Some like to call it the green revolution or the transition to renewable and alternative energy. How you want to label it isn’t what matters. 

All we care about is that the landscape for energy and how we use it is changing dramatically.

As the world quickly changes and the demand for energy expands, how we generate and utilize it, as well as the natural resources we rely upon to do so - will inevitably change, and adapt to this new environment.

Of course, we’ll continue to burn coal, crude oil, and natural gas for the foreseeable future. But there are other pockets of strength arising in areas that could very well be secular growth trends for decades into the future.

We’re always looking to identify these new arenas of growth. Here’s the way we see it...

With strong prospects for global growth and economic expansion in the cards, additional energy sources will need to be created so that supply can meet the growing demand being placed on an already antiquated and stressed infrastructure.

From the desk of Steve Strazza @sstrazza

I've personally been in the market for a new or used car for a few months now, and let's just say it hasn't been easy. The entire supply chain has been disrupted, and the market has been unable to keep up with demand.

I finally made the decision to stop my search until the supply crunch for semiconductors and other critical inputs alleviates. I could be waiting a while though, as this has already been going on for about a year. Thankfully, I live on an island that is only 8 square miles, so my bike or feet can take me wherever I need to go in the meantime.

According to a recent article from the Wall Street Journal:

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

As many of you know, 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 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 Steven Strazza @Sstrazza 

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be of any security, in any asset class, on any timeframe. Sometimes it’s an absolute price chart, other times it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So, let us know what it is… Buy, Sell, or Do Nothing?

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

Earlier in the week, we held our July 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 and Ian Culley @Ianculley

What started out as a tactical bounce in the US Dollar could be turning into a full-fledged reversal of the primary trend.

Defensive assets such as US Treasury bonds and the Japanese yen are catching a bid. On the other hand, risk assets continue to struggle at overhead supply. Many are experiencing significant selling pressure at these logical levels.

With each passing day, the choppy environment that’s been in place since early February is becoming increasingly messy. 

This is a perfect environment for the US dollar to thrive as more and more investors are hiding out in safe-haven assets and waiting for the smoke to clear.

From the desk of Steve Strazza @sstrazza

This is one of our favorite bottoms-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 in their direction and make them a pretty penny.

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 bottoms-up scan, "Under The Hood."

To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. There are also price and liquidity filters. Then, we simply sort by proximity to new highs in order to focus on the best players only.

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 context of the big picture 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.

From the desk of Steve Strazza @Sstrazza

Our Top 10 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.

From Failed Moves Come Fast Moves

Markets have been unequivocally choppy. Breakouts are failing, new highs are dwindling, and it’s becoming more challenging to find trending opportunities. Last week, we discussed how Semiconductors failed to breakout, and asked whether its peer industries would follow suit. Well, we have our answer now… One of the strongest industry groups in the last two months, Internet, just printed a failed breakout at its February highs. Software looks frighteningly similar.

Digging into some of the components, Amazon, the largest weighting of the group, is in the process of retesting its September 2020 highs of 3550. And to compare the industry group to one of its peers, Semiconductors have also put in a failed breakout. 

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

One of the main themes we discussed in the Q3 Playbook we published last week is the lack of any directional bias for equities on a relative basis.

We’ve been obnoxious about the trendless environment for equities on an absolute basis... and now we’re noticing a lot of the same play out in many of the relative trends we monitor.

When there is no edge on absolute terms, we can at least try and generate alpha by taking advantage of relative trends through pair trades.

But, right now there’s really nothing out there giving us an opportunity to do so. This is about as rough of an environment for money managers as you’ll find.

All we see is sideways, sloppy, range-bound action… Standard year-two stuff!

To illustrate what we mean, let's take a look at each large-cap sector SPDR relative to the S&P.

We'll start with the “growthy” sectors.

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

Opportunities are springing up in the commodity space!

Yes, energy, base metals, and (especially) precious metals continue to consolidate below overhead supply.

But this doesn’t necessarily speak to weakness… 

In fact, much of the sideways chop in commodities is taking place at logical levels of resistance. And aside from the dramatic sell-off in lumber, we see more upside resolutions than violations of critical support levels.

We recently pointed out that base metals managed to hang tough in the face of a significant correction in copper. And this week, tin is breaking out to new all-time highs.