The market pretty much drifted lower all day.
It erased yesterday’s bounce, and $SPY closed to its respective gap below.
Expert technical analysis of financial markets by JC Parets
by David
From the Desk of Kimmy Sokoloff
The market pretty much drifted lower all day.
It erased yesterday’s bounce, and $SPY closed to its respective gap below.
by JC
Is now the time to get long equities?
If you kept up with the headlines and what the sell side analysts have to say, you’d think it would be.
Fortunately we try to stay ahead of the curve around here.
Yesterday we discussed the recent sentiment shift among permabears, wall street analysts, hedge funds and financial media.
To add to that sentiment shift, here is the our internal sentiment composite which includes data from Individual Investors, Advisories, Active Investment Managers, Volatility and the Options Market.
As you can see last year saw some of the most pessimistic levels in history, giving us one of the greatest buying opportunities we’ve ever seen.
Today, Sentiment is at the opposite extreme: [Read more…]
by David
From the Desk of Kimmy Sokoloff
The indices ran right to resistance yesterday only to get slammed overnight.
It’s a little bit of a tug of war right here between the bulls and the bears.
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.
by Ian Culley
From the Desk of Ian Culley @IanCulley
One of my favorite scenes from “Forgetting Sarah Marshall” is when we get to meet the in-house surf instructor, played by Paul Rudd.
Rudd’s character, Chuck, a transplant local, imparts sage advice, “When life gives you lemons, just say f@&k the lemons and bail!”
I always laugh at that one, even as I write this note.
That’s probably because I’ve spent the better part of the past twenty years chasing waves – but I don’t share this Hollywood version of a stoner-surfer ethos regarding life.
But I do follow this mindset when it comes to markets…
by David
From the Desk of Kimmy Sokoloff
$SPY and $QQQ are stuck under a lot of resistance levels.
There’s a possibility we break above those levels this week, but we must keep stops tight.
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
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.
No matter how you measure volatility, there is no ignoring the fact that the daily moves (both realized and expected) have shrunk dramatically in the cryptocurrency space, most notably in granddaddy Bitcoin $BTC.
Here’s Strazza this morning on twitter:
Implied volatility can remain muted for as long as it wants to. It’s not going to expand on my schedule. But at least when we’re range bound and options prices are relatively cheap, we can position ourselves further out in time to take advantage of the next big move.
That’s exactly what we’re going to do. [Read more…]