Expert technical analysis of financial markets by JC Parets
Today’s most significant insider transaction report is another Form 4 filing by Warren Buffett’s Berkshire Hathaway $BRK.A.
Buffet continues to build his position in Occidental Petroleum $OXY, as he disclosed an additional purchase of roughly $582 million.
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.
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.
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.
We expanded our universe to include some mid-caps.
To make the cut for our 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.
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 big picture context 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 Charts 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.
Equites Suggest Rates Roll
It’s not just commodities and the bond market that are disagreeing with the action from yields these days. We’re not getting confirmation from the stock market either. The Equities For Rising Rates ETF (EQRR) always offers excellent information to either support or contradict what we’re seeing from the bond market. When we overlay EQRR with the US 10-Year Yield (TNX), they look almost identical.
What this chart tells us is that the stocks that tend to do well in a rising rate environment could not hold their former highs and are now stuck below overhead supply. This lack of confirmation supports our outlook for a pause and some corrective action from yields in the near future.
From the desk of Steve Strazza @Sstrazza
Our Hall of Famers list is composed of the 150 largest US-based stocks.
These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.
It has all the big names and more.
It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that which you can check out here.
The Hall of Famers is simple.
We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.
Let’s dive right in and check out what these big boys are up to.
From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley
So far, 2022 has been a historic year. That theme intensified during the second quarter, which is now in the books.
The bond market is working on one of its worst years on record. The S&P 500 just posted its worst quarterly return since 1970 with the index down more than 16% from January through March.
Bitcoin finished the quarter with its second-worst return in its short history. And now the energy sector – the market’s leader this year – just posted its third-worst monthly return since the 1990s.
The operative words here are “worst” and “return.”
That’s 2022 in a nutshell. The bears are in complete control.
However, one area that has held up through all this is commodities. It was the best-performing asset class in 2021, and it’s the only one to close the first half of 2022 in the green.
Let’s note that the first quarter of 2022 was far different from the second. And before we go running to commodities for safety, let’s put the group’s recent performance in perspective. [Read more…]
This is the video recording of our July 1, 2022, Inside Scoop Weekly Strategy Session.
