What’s the trade today?
Is it a long? Is it a short?
Is it a neutral trade?
In today’s video, Sean and I talk about what to do when there’s nothing to do!
More of the Same From Forex
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
Consolidation and range-bound action have dominated the currency market since late last year.
While commodities and cyclical stocks — especially energy — continue to catch a bid, commodity-centric currencies like the Australian and Canadian dollars fail to show any definitive signs of strength.
At the same time, the US dollar isn’t doing much either, as the US Dollar Index $DXY has been chopping sideways for several months.
Long story short, indecision is the overarching theme for forex markets at the moment.
One forex pair that does an excellent job of illustrating the trendless nature of these markets is the AUD/JPY.
2 to 100 Club (02-16-2022)
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.
Is Bitcoin More Important Than the S&P 500?
Remember back in the day when crypto was its own thing?
It didn’t matter what the Dow, copper, or bonds were up to because Bitcoin and crypto did whatever they wanted.
That ain’t the case anymore.
Today’s market is entirely different, with far more sophisticated drivers than just a few years ago.
Crypto and risk assets have become heavily correlated. And, in some respects, Bitcoin’s really just been somewhat of a beta chase ever since the onset of the pandemic.
Last month, the 30-day correlation between the Nasdaq 100 and Bitcoin was an incredibly positive 0.90. They’ve traded in lockstep with each other.
So it’s fair to say that if you’re a crypto trader, it’s paid to watch the macro environment.
But let’s apply that thinking in reverse.
“Will we enter into a bear market?”
The 40/40 Club
In Major League Baseball, the 40/40 Club is an exclusive group of players who are the only ones to have achieved both 40 home runs and 40 stolen bases in the same season.
The first player to achieve this milestone was Jose Canseco in 1988 as a member of the Oakland A’s – back during the “Bash Brothers” days with his steroids pal Mark McGwire.
Since then, only three other players have joined this list: Barry Bonds (1996), Alex Rodriguez (1998), and Alfonso Soriano (2006).
Here at All Star Charts, we’ve achieved a little bit of our own 40/40 dynamic as JC celebrated his birthday this week and joined me in the 40+ crowd of awesomeness. Perhaps it’s not quite as exciting as crushing home runs over the wall or swiping second base against catcher Yadi Molina. But I like to think it’s cool in its own way.
We’re not getting old, we’re getting seasoned – with a little extra sriracha.
Meanwhile, [Read more…]
Follow the Flow (02-14-2022)
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 in their direction and make them a pretty penny.
Then we flip through our list of stocks flashing unusual activity and pick the best setups using many of the same technical filters we do for our other scans.
And, just like that, we’ll follow the money flow and fatten our own pockets along with some of the world’s most powerful financial institutions.
The Minor Leaguers (02-14-2022)
From the desk of Steve Strazza @Sstrazza
Welcome to our latest Minor Leaguers report.
We’ve had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.
We recently decided to expand our universe to include some mid-caps…
For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.
That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.
The way we did this is simple…
To make the cut for our new Minor Leaguers list, a company must have a market cap between $1 and $4B.
And it doesn’t have to be a Russell component–it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.
The same price and liquidity filters are applied. Then, as always, we sort by proximity to new highs in order to focus on the best players.
But, instead of all-time highs, we’re sorting by 52-week highs these days, as we don’t want to discriminate against energy or other cyclical stocks.
The goal is still to catch the strongest names while they’re small and have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge.
We’re looking at up to 10x moves just to break into large-cap land!
Let’s dive into this week’s report and see what’s happening in some of the hottest stocks in the Minor Leagues.
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