This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.
Buying a Natural Gas Breakout
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
The relentless outperformance from commodities and commodity-related assets shows no signs of slowing.
The CRB Index is up 27.03% year to date while the S&P 500 and the 30-year Treasury bond aren’t even in the ballpark, posting lackluster performances of negative 4.95% and negative 6.25%, respectively.
Commodities are really the only game in town these days.
With that as our backdrop, we want to continue focusing on this asset class for buying opportunities.
As many of these contracts consolidate or correct following explosive upside moves, we’re paying extra attention to those that have been basing in recent months – such as natural gas.
Let’s take a look. [Read more…]
International Hall of Famers (04-01-2022)
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 from countries 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.
[Video] Options Trading w/ Sean & JC | Zooming Out to Zero In on Uranium
For this week’s trade, we’re putting on a $CCJ September 30/40 Bull Call Spread for an approximately $2.20 debit. This means we’re long the 30 calls and short an equal amount of 40 calls for a net debit which represents the most we can lose in this trade.
Get the full details, risk management procedures and targets for this trade here:
The Truth About the Yield Curve
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
It finally happened…
The yield curve inverted for a brief moment as the 2-year yield rose above the 10-year earlier this week.
But whether or not it inverted yet is beside the point. It’s been flattening for a long time, and that’s the direction we’re headed in. It’s only a matter of time.
While media outlets and fearmongers will spin this development as an urgent warning of an impending bear market, here’s what you need to know: Throughout history, equities have done well during and after inversions.
This commonly observed leading indicator has a tendency to precede major market tops by years, not months. In other words, there’s still time. The average lead time is about 18 months after prior inversions.
More importantly, when it comes to forecasting bear markets and recessions, many experts will argue that it is actually not the 2-year we should be focused on, but the 3-month yield.
And when we do this, the outlook is the exact opposite of what the 2s/10s spread is currently portraying.
Let’s take a look!
The Notorious Underworld of Anons and the Wassie
From the desk of Louis Sykes @haumicharts
Alright, time for a light-hearted story.
Over the last few months, I’ve jumped down the rabbit hole that is Crypto Twitter (better known as CT).
As someone who’s snooped around Financial Twitter (or FinTwit), a community dominated by industry professionals, CMTs, and CFAs, opening the trapdoor into CT felt similar to the culture shock I would experience moving to a new country.
Anyone that’s had a presence in CT knows the culture: anon (anonymous) accounts, constant meme-ing, and shit-posting from a community of outcasts and degenerates enjoying riding the volatility of a new generation of assets.
This carnage was the perfect breeding ground for the wassie…
2 to 100 Club (03-30-2022)
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 bottom-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, to 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.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, Salesforce, and myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table, you’ll notice we’re only focused on Technology and Growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc.
Then, like any good technician, we filter the list down to those closest to new highs.
This allows the cream of these strong groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
[Options] Zoom Out, Drop In.
JC had a great blog post out this week about zooming out. In a nutshell, he was reminding us that zooming out and looking at price action from a wider lens often makes the present murky waters look suddenly clear. It’s easy to get distracted by the day-to-day price action and to look at only the last few months of daily charts and conclude that a stock or an index is in one sloppy clusterjam of price action.
But when you look at that same price action, instead with weekly or monthly candles, the more recent ones will often look like insignificant noise in an otherwise smoothly trending longer term pattern.
In the post referenced above, JC shared several current examples of instruments that look sloppy recently, but the bigger picture is still sitting pretty.
One of the stocks he mentioned is currently giving us a nice pullback to get a nice entry on. [Read more…]
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