This is the video recording of our December 1, 2021 Monthly Charts Live Strategy Session
The Short Report (12-01-2021)
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.
Treasury Spreads Tank
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
Treasury yield spreads are contracting.
Inflation has been the talk of the town in recent weeks. But, now that the Federal Reserve has finally joined the chorus, the market seems to be headed in a different direction. At least over the near term.
Short rates are holding up just fine, but the longer end of the curve has been under serious pressure.
We’ve been closely monitoring long-duration rates for signs of further weakness. As we write, the 30-year is violating its summer lows, and the 10-year is testing a critical level of interest around 1.40%.
The bulls really need these levels to hold. If they don’t, we’d better get used to the recent volatility–because it’s likely to get worse.
Let’s take a deeper look! [Read more…]
No-Man’s Land
From the desk of Steve Strazza @Sstrazza
Plenty of stocks continue to show relative strength through the recent volatility. We still want to be buying these leaders.
And plenty of stocks continue to underperform, having already violated their year-to-date ranges to the downside. Those are the names we want to be looking at to short.
But most stocks are simply in “no-man’s land” right now.
Some were rejected at their year-to-date highs. Others broke out and quickly failed. It doesn’t matter how they got there. What matters is they’re now “back in the box” and facing the very same overhead supply levels they’ve faced for much of 2021.
It looked as if markets were making progress earlier this month. But it turns out most of these new highs were — dare I say —transitory?
Let’s take a look at financials, using the group as a case study for how we want to approach all the range-bound patterns we see out there.
[Options] Back in the Box
I got all excited when Russell 2000 — as measured by $IWM — broke higher out of the 8-9 month range back in early November. To me, that felt like a big sign that stocks on the whole were about to go on a big bullish run into year-end.
Well, the sad trombone has been played and the breakout was short-lived. And as you can see from this chart, $IWM in recent weeks has completely retraced the breakout and has fallen right back into the middle of the previous range:
Man, what a letdown — for the bulls.
But us options traders over here smell an opportunity! [Read more…]
How To Trade Crypto Currencies
This is the video recording of our November 30, 2021, Tuesday Evening Crypto Livestream.
Commodity-Centric Currencies Slide
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
As we near the close of another month, crude oil is once again front and center.
At the end of October, black gold was ripping to new seven-year highs while interest rates rose and cyclical stocks kicked back into gear.
Today, this picture has dramatically changed.
Crude oil is currently about 20% off its highs, as prices have collapsed back below our risk level.
Follow The Flow (11-29-2021)
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.
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