From the Desk of Ian Culley @IanCulley

If silver doesn’t come to play, precious metals won’t win the day.

Gold’s resilience has been impressive lately, especially as its two main headwinds – the US dollar and real yields – catch higher. 

But while all eyes are following gold as it coils just below all-time highs, I’m tracking silver. Because gold’s doggedness is all for naught if silver breaks down.

Analyzing Unusual Options Activity | The Flow Show https://t.co/XsSONHUcYV

— Sean McLaughlin, NLD 📈 ( formerly @chicagosean) (@OptionsSean) February 5, 2024

Today on The Flow Show, me and Steve Strazza chatted about the current $VIX environment, the potential for sideways, volatile trading action, and our internally diverging views on the overall market (JC is getting more bearish, Strazza is still flying the Bull Flag, and I'm closer to Switzerland).

As we dug into it, Strazza floated a couple ideas in the Healthcare space that made sense to me once we fleshed it out.

The market wasted no time starting to sell off in the month of February.

Remember, this is historically one of the worst months of the year to own stocks.

Also, the best 3 month period of the year (Nov-Jan) just came to an end.

So if stocks weren't selling off, that would be weird.

Stocks move first, and then the indexes follow.

It's a market of stocks, remember?

And while the S&P500 may have just had its 4th consecutive weekly gain of at least 1%, the stocks themselves are NOT doing that.

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.

From the desk of Steve Strazza @Sstrazza

Our International Hall of Famers list is composed of the 100 largest US-listed international stocks, or ADRs.

We've also sprinkled in some of the largest ADRs from countries that did not make the market cap cut. 

These stocks range from some well-known mega-cap multinationals such as Toyota Motor and Royal Dutch Shell to some large-cap global disruptors such as Sea Ltd and Shopify.

It's got all the big names and more–but only those that are based outside the US. You can find all the largest US stocks on our original Hall of Famers list.

The beauty of these scans is really in their simplicity.

We take the largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Based on the market environment, we can also flip the scan on its head and filter for weakness.

Let's dive in and take a look at some of the most important stocks from around the world.

Here's this week's list:

...

From the Desk of Ian Culley @IanCulley

Holy reversals, Batman!

The tactical direction flipped for the dollar and rates this morning on the heels of stronger-than-expected job growth. 

Whipsaws are dotting the charts, erasing weeks of progress.

How should we react?

Today, I want to show you a trade we can take to sidestep the market chop.

Live cattle futures are posting modest gains today (up roughly 0.50%) as they mosey toward last year’s high. 

Most importantly, they’re shrugging off the broad intraday volatility.

Plus, the structural uptrend remains intact. And I can’t help but wonder if and when lean hogs will catch up to cattle. 

Check out live cattle overlaid with lean hog futures:

These two markets tend to peak and trough together, often trending in the same...

There's nothing like a good rug pull.

Especially when I'm able to make money from it.

This is the type of environment where they happen.

Some of our biggest clients are hedging their positions by buying puts.

Some are outright net short.

It all depends on what you're trying to accomplish as an investor.

Here are a few of the many warning signs we're seeing out there:

Look at High Beta rolling over last month, while S&Ps kept roaring higher.

Not to mention the Dollar strength we're seeing is off the charts. There's your divergence in EM currencies.

And of course, we've already discussed...

February is one of the worst months of the year to own stocks.

Is that why we've been seeing all this rotation into defensive sectors?

Think about it, we haven't seen any rotation at all into Consumer Staples this entire bull market.

Until now.

And if you go back and study the history of bag holders, you'll notice that they love buying stocks when Consumer Staples finally start to become leaders.

This is classic rotation you see quite often ahead of a tough time for the market:

From the Desk of Ian Culley @IanCulley

The FOMC stuck to its script this week, kicking the can and keeping rates steady.

Everyone was expecting the news. But the market wasn’t expecting Fed Chairman Jerome Powell (the man, the myth, the legend) to completely dash its hopes of a March cut. 

Strangely enough, rates continue to fall on the news – even as markets adjust to the possibility of the initial rate cut now coming in May.

Before you run out to buy US treasury bonds, check out the overlay chart of the US 2- and 30-year yields:

There’s a big difference.

The 2-year yield is churning sideways, reflecting the market’s expectations of the FOMC’s next move – nothing in the foreseeable future.

On the other hand, the 30-year yield is turning lower. Unlike the short end of the curve, the long end gauges the prospect of long-term economic growth.

What do we do with this information?

Buy long-duration bonds! That’s a much better option than sitting around dreaming of an...

From the Desk of Steve Strazza @Sstrazza

We love our bottoms-up scans here at All Star Charts. We tend to get really creative when making new universes as we want to be sure they will deliver us the best opportunities the market has to offer.

However, when it comes to our latest project, it couldn't be any simpler!

With the goal of finding more bullish setups, we have decided to expand one of our favorite scans and broaden our regular coverage of the largest US stocks.

Welcome to The Junior Hall of Famers.

This scan is composed of the next 150 largest stocks by market cap, those that come after the top 150 and are thus covered by the Hall of Famers universe. Many of these names will someday graduate and join our original Hall Of Famers list. The idea here is to catch these big trends as early on as possible.

There is no need to overcomplicate things. Market cap is a quality filter at the end of the day. It only grows if price is rising. That's good enough for us.

The bottom line is it is a bull market. We want as many vehicles and options...

Let me remind everyone what a bad idea it is to sell naked calls.

We don't do it.

I often want to do it.

Many times, it makes sense to do it.

But the answer is always no.

It's just not worth it.

Go ask around. The old timers will tell you.

"Don't do it kid"

But that doesn't mean that as a philosophy, we shouldn't approach the market with that sort of "naked call selling" mentality, at least for the foreseeable future.