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From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge 

September saw significant selling pressure in equity markets. The S&P 500 suffered its worst drawdown since last year, and many of the major indexes made a lower low. But when we look under the surface, it really wasn’t that bad. 

We didn’t get an expansion in new lows to confirm the new lows in price. Instead, these readings remained muted across most of the major averages in the US.

Since then, the bulls have regained control. Breadth has improved throughout October as the indexes have rallied back toward their former highs. Although we haven’t seen a real expansion in participation at the index level, things have definitely been moving in the right direction.

Let's talk about it.

Here’s a look down the cap scale at new 52-week highs for all three S&P indexes, from large to small:

Fewer stocks are making new highs today than they were when markets peaked back in September. 

But we are seeing some important...

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

It’s no secret. 

As investors, we've been rewarded for buying stocks and commodities over bonds for more than a year now. And this will most likely remain the case, as more evidence suggests we’re in an environment that favors risk assets.

The copper/gold ratio hitting new seven-year highs, AUD/JPY testing its year-to-date highs, and cyclical stocks assuming leadership all point to an increasingly risk-on tone.

But for some of us, it’s not as simple as selling bonds and walking away. In some scenarios, we must have exposure to the bond market.

If that’s the case, we want to focus on the riskier areas of the market, just like we’re doing with other asset classes.

Let’s look at a few charts that direct our attention to the strongest areas of the bond market.

First, we have a chart of Inflation-Protected Securities...

From the desk of Steven Strazza @Sstrazza and Grant Hawkridge @granthawkridge

Most risk assets peaked during Q1 or May of this year and have consolidated in sideways ranges ever since.

But the bulls have started to take control of many of these trends. We're seeing more and more upside resolutions -- and this phenomenon isn't limited to Crude Oil, Rates, AUD/JPY, and cyclical stocks. Similar patterns are also playing out when we look at intermarket ratios, particularly those we use to measure risk appetite.

In today’s post, we'll dive into one of our favorite risk-appetite relationships and check for price confirmation in a variety of ratios.

First up is none other than large-cap consumer discretionary versus consumer staples stocks: 

JC already wrote about the breakout in XLY/XLP this week, which you can read here.

The bottom line is this breakout is bullish for the broader market. Stocks are likely moving higher across the...

This is the video recording of the October 2021 Conference Call.

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

Interest rates, inflation expectations, and commodities are all on the rise. 

But as these pieces of the intermarket puzzle fall into place, it’s hard to make sense of the strength in the US Dollar Index $DXY. That’s also been on the rise recently.

Even other areas of the currency market don’t quite fit with the action we see in the USD. We pointed out the absence of risk-off behavior in a post last week where we highlighted the broad weakness in the yen as well as AUD/JPY making new multi-month highs.

So what’s going on with the US Dollar Index?

Let’s look under the hood at some individual USD pairs and their trends across multiple timeframes to see what the weight of the evidence is currently suggesting.

First, let’s look at the short-, intermediate-, and long-term trends in some of the main US dollar crosses:

...

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...

From the desk of Steve Strazza @Sstrazza.

Welcome back to our latest "Under The Hood" column, where we'll cover all the action for the week ended October 15, 2021. This report is published bi-weekly and rotated with our "Minor Leaguers" column.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

Watch this video for a "behind...

These are the registration details for our live conference call for Premium Members of All Star Charts.

This month’s Conference Call will be held on Tuesday October 19th at 6PM ET. As always, if you cannot make the call live, the video and slides will be archived and published here along with every other live call since 2015.

Here are the details for Tuesday night:

There is more money being allocated to risk assets than there are risk assets to feed that demand.

It's not about the Fed, or the Trump or the COVID.

Prices go up when there's more demand than supply for assets. And that's what we see.

Here's exhibit A. Crude Oil is making new 7-year highs.

And why do you think that is happening? Is it because there's more supply of oil than there is demand for it? Or is it because there is more demand than supply?

You can complain about higher oil prices, or you can celebrate. You get a choice in this country.

Which one will you be?

I'd rather be celebrating with friends and family that we're all paying twice or even 3 times the price at the pump!

You can always check out the list of my favorite trade ideas here.

Also check out this Canadian Integrated $CVE: If we're above 11,...

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 Steve Strazza @Sstrazza

Our International Hall Of Famers list is composed of the 50 largest US-listed international stocks, or ADRs.

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 big US names on our original Hall Of Famers list.

The beauty of these scans is really in their simplicity.

We take the 50 largest names each week and then apply technical filters in a way that the strongest stocks with the most momentum rise to the top.

Let’s dive in and take a look at what some of the largest stocks around the world are doing.

Here’s this week’s list:

And here’s how we arrived at it...

• We filtered out any names that...

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

Copper was a critical piece missing from the intermarket puzzle heading into the fourth quarter.

Just last week, copper was testing year-to-date lows and looking vulnerable for a downside break. Meanwhile, energy futures and interest rates were rising, and cyclical and value stocks were getting back in gear.

The mixed signals were impossible to ignore. It’s not likely that the recent breakouts in crude oil and the US 10-year yield would hold in an environment where copper is breaking down.

Dr. Copper is a great leading economic indicator and critical to the global growth narrative. Let’s see what it’s saying.

Here are two ways we were looking at the copper chart:

We were wondering whether this was a major head-and-shoulders top or just a continuation pattern that would...