Expert technical analysis of financial markets by JC Parets
It’s the weekly currency edition of What the FICC?
So far this week, the Japanese yen has stolen the show. But where does that leave the USD/JPY heading into 2023?
Check it out!
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.
From the Desk of Ian Culley @IanCulley
What do you do when the party gets out of hand?
You raise the roof!
That’s what the Bank of Japan (BoJ) did yesterday as its former yield curve control policies became untenable. After intervening to keep its 10-year yield below 0.25%, it shifted the ceiling to 0.50%.
Naturally, the yen responded in earnest. It posted an explosive rally following the BoJ policy shift, gaining more than 500 pips against the dollar.
But where does that leave the USD/JPY heading into 2023?
From the desk of Willie Delwiche.
Seems like almost everyone has a 2023 earnings estimate for the S&P 500. The thinking seems to be that if you are going to make up a year-end guess at price you should come up with one for earnings as well. That’s not a game I want to play.
Why It Matters: It’s not the overall levels that matter, but whether those levels are being revised higher or revised lower. Earnings estimates for more and more companies were being revised lower over the second half of 2021 and the first half of 2022. That trend has stabilized since mid-year. If the worst case for 2023 is priced in, there is room for both price and earnings revisions to move higher. If it is not, then the lows established over the second half of 2022 are not likely to hold. Remember, when it comes to adapting to incoming information, it’s not a question of whether it is good or bad, but whether it is better or worse than expected.
In this week’s Sentiment Report we take a closer look at how investors are feeling as they say goodbye to a messy & challenging 2022.
We’ve covered before how much I like buying stocks that are making new all-time highs. I like them, even more, when I can buy call options because premiums are low. And it’s a cherry on top when the stock pays a meaty and steady dividend which lends price action support over the long run!
Today’s trade checks all these boxes. [Read more…]
It’s the end of the year, a time when I often go through my mental inventory to try to catalog things I did well in the current year – and things I did badly. I then try to envision what doing more of the good and less of the bad would look like in the new year.
It sounds too simple.
And in theory, it is. Do more of what works and less of what doesn’t. Duh.
I can’t declare that this mental exercise solves all my problems and turns my trading account into an ATM that prints cash daily. But it is a muscle worth working on. That’s because the productive rabbit holes I’ll often go down will yield new ways to do the good things better. I’ll even arrive at completely new ideas to try that may lead to even better results.
Maybe one thing to think about is – what do I fear? What am I afraid to do, try, or experience? And why does this trepidation exist? Is it well-founded and based on sound reasoning? Or is the fear of the unknown? I might think it’s the fear of failure, but maybe it’s the fear of success. Sounds crazy, but the fear of success is a real thing. Success can take us out of our comfort zone and that can be scary. Maybe I like being comfortable, and it weighs on my subconscious more than I think. Maybe I need to get comfortable with being uncomfortable.
What’s on your mind as you head into the new year? If you haven’t sat down to think, perhaps set aside a quiet hour with a pen and a few clean sheets of paper and start noodling. You might surprise yourself!
Trade ’em Well,
Sean McLaughlin
Chief Options Strategist
All Star Charts, Technical Analysis Research
