We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

It's a new year!

Are you ready to crush it?

I am.

But it seems investors are coming in skeptical of what 2022 might bring.

As we've already mentioned, the data points to investors being much much more bearish coming into 2022 than they were going into 2021 or 2020, where they were incredibly bullish and optimistic going into those years.

But as we know all too well, stocks peaked in February of both those years, on an absolute basis in 2020 before the COVID crash, and internally in 2021 when many stocks started their declines.

This has been a common theme so far in my year-end analysis: using the words "New Highs" much more than usual.

Premium Members can download our Monthly Chartbook here.

Take a look at a broad measure of European stocks coming out of a 20-year base and now making new all-time highs.

Last week, we outlined how the recent recovery in leverage in the derivative markets combined with thin end-of-year liquidity would exacerbate volatility. This same message continues to ring true.

Open interest is elevated, and the market has become susceptible to an unwind via a long/short squeeze in the coming weeks. Even a small supply-and-demand catalyst has the potential to cause a big shift given these current market conditions.

We want to dedicate this week's report to describing how we're approaching this period and defining the probabilities we're weighing with each scenario.

The data is in.

2021 is in the books.

And it was a good one for most risk assets. Although the majority of stocks had their struggles at some point throughout the year, sector rotation continued to drive index prices higher. And it wasn't just stocks, risk assets in general had one for the record books.

The Average stock in the S&P500 was up 27.6% in 2021.

The Median S&P500 stock returned 25.2% for the year.

The market had been a mess for most of 2021. But even as the weakness persisted at the end of the year, we repeatedly highlighted the strength coming through in the IT space.

Well, this post is no different. We have breakouts, people! Let's take a look!

Below is the IT index with the important levels that we'd like to track.

Nifty IT has been sticking its head out every time we've looked for bullish momentum and strength in the market. And that strength is evident from the chart below when you look at the bottom pane of the chart. The relative strength pops right off the page. We can also see that the average drawdown has been a low 15% while most sectors have it way worse with no show of strength whatsoever.

What's our pick from the sectors even now?

IT.

Click on the chart to zoom in.

It was a big year for Crypto, Web 3.0, the Metaverse and all things Blockchain.

In case you didn't hear, a lot of people made a lot of money. And "a lot" is probably understating it.

How'd you do?

Either way, win lose or draw in 2021, we're looking forward to 2022. But in order to do so responsibly, it's important to know where we've come from.

It's Saturday Morning Chartoons time. 

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.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

In recent weeks, we’ve been diving into individual commodity groups to size up the structural trend and to get a better idea of where we’re likely headed in the new year.

Last week, we highlighted energy contracts and the fact that many are still grappling with overhead supply. And earlier in the month we covered the worst-performing area of the commodity markets - precious metals.

Today, we’re going to turn our attention back to metals and review the base metals group.

Even with the S&P 500 printing record highs, trading ranges and overhead supply stole the show in 2021 and those dominant themes are evident when we look at base metals.

Notice the strong relationship between our equal-weight base metals index and blue-chip international equities in the Global Dow Index $DGT.

Here is a list of trade ideas organized by date, ticker symbol and directional bias. Please make sure you have clicked on the link and read the details surrounding the trade before acting upon any of them. Also, make sure you have checked with your financial advisor and tax accountants to make sure you are suitable to be executing what is discussed on this website. The risk management procedures and targets are detailed for each idea. Please read and review the terms and conditions page before making any trades of your own.

From the desk of Steve Strazza @Sstrazza

Yesterday, we wrote a post about scanning for new lows, putting our own spin on a strategy called "Wall Street's only free lunch."

I was joking with JC that it felt a bit uncomfortable to search through such a weak list of stocks. After all, we’re used to scanning for strength.

But the scan was a fun exercise, and we found some weakness we want to be buying in secular leaders. 

The universe wasn’t exactly full of strong stocks, as we were scanning for new 52-week lows. But that’s OK; we have plenty others for that.

In this post, we’re going to walk through another scan we did internally this week. Unlike the "free lunch," this one is more in line with our top-down approach of finding the strongest stocks in the strongest groups.

While we're still scanning for new lows, we’re doing so on a much shorter time frame, and we're adding additional filters to ensure all the stocks on our list are leaders.

We like to tailor our scan parameters to the market environment. As such, we’re always changing it up...

The bond market continues to price in higher inflation and higher interest rates.

The types of stocks that tend to do well in that environment are Energy and Financials. So that's where we're looking.

An area that continues to see relative strength is in Semiconductors. One name in particular stands out from Amsterdam is ASML.

We talk about all of this and more in this short New Year's Eve Clip: