If tech stocks are signaling that a bottom is in, we're of the mind that we'll find some significant beta in a badly beaten household name: The recently renamed Meta $META (otherwise known as Facebook...).
Chatting with JC this morning, he was drawing a comparison of META to what Gold Miners $GDX did in 2016:
In the arsenal of every trader and technical analyst lies a countless number of indicators, metrics, and tools.
Everyone in the business is aware of the classic indicators: moving averages, Fibonacci extensions, momentum oscillators... the list goes on.
Perhaps one of the most valuable tools is the AVWAP. This is merely a representation of the average price by volume anchored to a specific time.
The AVWAP works because it takes advantage of human psychology. It's universally accepted within the scientific community that humans are driven by a slew of biases. Ask any trader, and they'll attest.
An incredibly common heuristic that drives much of the financial industry is the age-old anchoring bias. Many traders irrationally make decisions solely based on the price they paid for a stock.
In this sense, the market is driven by these participants responding to supply/demand dynamics within the context of their personal anchoring.
When the worst stocks on the planet can't go down any more, that's usually good information.
We saw a lot of Small-cap Growth, Arkk Funds, Biotech, Chinese Internet and many of those other "Growthy" areas bottom out this Spring, and some of the last ones in June.
At the Mega-cap level, nothing caused more shareholder wealth destruction than Facebook, down 60% from its highs less than a year ago.
With a few breadth thrusts in recent weeks, and a little preview of what a weaker dollar could do to this market, we had plenty to talk about.
This question included: New Bull or Mean Reversion in a Bear?
I think the S&P500 tells an interesting story. You've got that massive top that formed throughout the past year, completing with a break of support this Spring.
And after further selling, the bounce has brought it back all the way to the neckline. These are the "trenches":
You probably think I say the same thing every week. That’s because I do.
Of course, I throw in a well-defined trade setup here and there, but always within the context of the dollar and its impact on the major asset classes.
It’s that important.
As the US Dollar Index rally is well underway, it’s interesting some individual USD crosses are finding resistance at historical levels of interest to both the currencies involved and risk assets!
Here’s a chart of the US dollar/Swedish krona cross zoomed out to the late 1990s:
These last few months have been rather lackluster if you're a crypto trader.
But that's perfectly fine.
The market should never be your dopamine fix. The ability to sit on the sidelines for long periods of time -- as difficult as it may be -- is often the differentiating factor separating mediocre traders from good ones.
Even in the face of this recent strength, there's still not a whole lot to discuss.
Cryptocurrencies have completed multi-year distribution patterns and are now retesting their breakdown levels from the underside.
There are most definitely mean-reversion trade opportunities out there. But they're low-conviction, counter-trend in nature, and messy.
Meanwhile, Ethereum and many other names have bounced nicely back into supply zones following their respective rallies.
If this tape has reflected anything, it's to be very aggressive in taking any profits. This is particularly true considering the countless whipsaws we've seen over the recent months.
The largest insider transaction on today's list is a Form 4 filing by Artal Group, which reported a purchase of roughly $40.4 million in Lexicon Pharmaceuticals $LXRX.
Artal Group now owns 83,835,950 LXRX shares, representing a roughly 47.5% ownership stake.
