Market breadth can be a funny thing.

People think it's easy. People think they can just pull up some indicator and it's always going to tell them whether market breadth is good or bad.

But that's not how it works. Some indicators are more valuable in certain environments than others.

From the Desk of Ian Culley @IanCulley

King Dollar reigns supreme, and its near-term rally shows no sign of slowing.

What can you do about it? 

You can profit from it.

Today, I’ll share with you three tactical setups for dollar strength. And they’re all close to triggering.

But, before I outline the trades, let’s look at the relationship between the dollar and stocks…

Last night, Alfonso dropped a stellar chart in Slack of the US Dollar Index $DXY overlaid with Consumer Staples $XLP relative to the S&P 500 $SPY:

The chart supports the inverse relationship between stocks and the US dollar that’s been in place for almost a decade.

Money flows out of the major stock indexes and into staples when investors are scared.

The same is true for the US dollar. That’s why these two charts look alike.

Interestingly, staples fell on a relative basis as the US Dollar Index chopped...

In today's Daily Digest, we'll review:

1. New Position in IWM.
2. No adjustments are needed today.
3. No exits since the last report.
4. Current status of open campaigns.

Let's dig in!

From the Desk of Steve Strazza and Alfonso Depablos

The most significant transaction on today’s list comes in a Form 4 filing by Warren Buffett and Berkshire Hathaway.

Buffett and Berkshire reported another substantial purchase in Occidental Petroleum Corp $OXY, this time with a total value of $245  million.

As crypto markets continue to churn sideways following the Bitcoin spot ETF approvals, positioning data suggests a once-crowded consensus bullish sentiment has cooled down. This comes within the context of Bitcoin retesting its long-term resistance level near 46,000. It’s within these periods that excessive positioning and sentiment calms down and allows the market to recalibrate for its next move.

Another day goes by in the market, and more selling came in.

Investors are making a habit of this whole selling thing.

You notice?

In yesterday's trading we saw the fewest amount of stocks in longer-term uptrends since mid-December. We also had the fewest stocks in short-term uptrends since mid-November.

You may not see the selling pressure as much at the index level, but for those of you who actually take the time to count what the stocks themselves are doing, you know.

Take a look at the new highs list, essentially non-existent throughout the month of January, even with the S&P500 and Dow hitting the highest levels ever.

You can also see the divergences in Consumer stocks, Small-caps and Emerging Markets currencies:

Good morning, Welcome to your daily crypto clarity

WHAT YOU NEED TO KNOW

Bitcoin continues to trade in a tight range, advancing the messy price action over the last few months.

February is a seasonally strong month for crypto, with Bitcoin closing higher 80% over the last decade.

Spot Bitcoin ETFs have added over 150,000 BTC under their AUM despite outflows from Grayscale’s GBTC.

$900M tokens are to be unlocked in February across major crypto projects.
 

FEATURED CHART

We’re always on the scout for leadership, irrespective of the market environment. With most crypto assets selling off following the ETF approvals, there have been a small number of outliers. Chainlink $LINK is one that comes to mind after continuing to work higher, while the price action in the majors has been rather lackluster.

WHAT TO LOOK OUT FOR

As we continue to say, we’re monitoring this trading range in Bitcoin. If prices remain stuck between 40,000 and 45,000, we’re anticipating more messy...

This is the video recording of our February 5th Monthly Charts Live Strategy Session

From the Desk of Steve Strazza @Sstrazza.

Welcome back to Under the Hood, where we'll cover all the action for the week ended February 2, 2024. This report is published bi-weekly, in rotation with The Minor Leaguers.

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.

Click here for a behind-the-scenes look at our process.

Whether we’re measuring increasing interest based on large institutional purchases, unusual...

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.

In today's Daily Digest, we'll review:

1. No new positions today.
2. Adjustment in USO.
3. No exits since last report.
4. Current status of open campaigns.

Let's dig in!