Today, Russia began its invasion of Ukraine. Markets, unsurprisingly, have reacted negatively, with Bitcoin no exception.

Particularly in times of geopolitical uncertainty that can induce this type of volatility, it's vital to be clear on your strategy.

Managing risk, having invalidation levels, and understanding your risk tolerance are considerable advantages.

As for how we've been approaching the market, it's been a mess.

Monday's note captured our approach.

When Bitcoin lost 41,000 last weekend, all bets were off, and we moved to cash.

There's been no edge in pushing crypto longs, even before the geopolitical volatility we've seen over the last 24 hours.

From the desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as a market of stocks.

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club.

We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports.

Now, we're also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

...

This month marks the one year anniversary of the top in stocks.

And more specifically, I mean the top in the internals of the U.S. Stock Market. Remember, that's the best things were, and it's been a painful deterioration ever since, particularly for most U.S. Index Fund investors, growth investors and most individual U.S. stock pickers.

The new highs list these days is loaded up with ADRs, Metals stocks, Staples and Energy. Most of the other stocks have been struggling. Not all of them are down, but many are sideways at best.

This chart really tells the story of what's been going on. We discussed it on Tuesday night's call:

From the desk of Steve Strazza @Sstrazza

We held our February Mid-Month Conference Call on Tuesday. ASC Premium Members can click here to review the recording and the slide deck.

In this post, we’ll summarize the call by highlighting five of the most important charts and/or themes we covered, along with commentary on each.

Let’s get right into it!

From the desk of Willie Delwiche.

Key Takeaway: Optimism wanes, and pessimism builds as the II bull-bear spread narrowed last week to just 1.2%, down more than 4% from the previous week. That brings the spread to its smallest difference since early April 2020. But it’s not until bears outnumber the bulls that we reach levels associated with significant market bottoms. Nevertheless, a surge in pessimism could become reality with active equity managers continuing to reduce exposure, consensus bulls dropping, and major equity indexes testing their respective January lows. Whether sentiment has completely unwound or is still in the process of unwinding is yet to be determined.

Sentiment Report Chart of the Week: Unwound or Unwinding

The NASDAQ is getting plenty of attention for the carnage that is occurring beneath the surface. The stat that really sticks out for me is that 95% of the trading days over the past three months have seen more new lows than new highs. That weakness is now hitting the index and while the...

At All Star Charts Crypto, we've emphasized the value of on-chain data that allows us to peer inside the blockchain to find reliable and actionable signals.

It seems almost every day in this blossoming asset class, there's a new dataset, indicator, or some other avenue to analyze price action with incredibly high resolution.

Alongside the on-chain data that's supplemented our traditional analysis, we're taking an increasing interest in incorporating order flow into our work.

We're beginning to find it provides considerable value in fine-tuning our approach, making for better executions, and helping skew the probabilities of success in our favor.

We'll walk through one of the many ways we use order flow in this post. Today we'll be discussing volume, or more specifically, volume delta.

Markets continue to be "messy" and it's tricky looking for positions to take aggressive stances in. And with VIX hovering at or near the 30 level for the better part of the past week and a half, the option trader in me continues to look for opportunities to sell premium.

A smarter man than me once told me: "If something is working, find ways to do MORE of it!"

Well, selling premium on balance has been working pretty well since January, so...

Chatting with the team this morning, one pocket of strength we identified that has been holding up relatively well in this slop is the banking sector. And while there weren't any individual names we were willing to bet the farm on, the financials sector ETF $XLF caught our attention as a good possible candidate for a delta neutral credit spread.

This is the video recording of the February 2022 Mid-month Conference Call.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Despite the trendless nature of the major forex pairs, there’s still plenty of information coming from the exotics right now – particularly emerging market currencies.

The Chilean peso – and its relationship to copper – now has our attention.

Let’s take a look.

Here’s a chart of the USD/CLP cross overlaid with Copper Futures $HG_F with a correlation study in the lower pane: 

Chile is the world’s largest copper producer, which explains the strong negative correlation between the USD/CLP pair and the price of copper.

You can see this relationship in the chart, as USD/CLP tends to peak and roll over at the same time copper bottoms out, and vice versa. 

The USD/CLP now appears to be topping and turning lower after finding resistance at its 2020 highs. USD/CLP also peaked at these levels after the COVID crash, which coincided with the start of copper’s rally to new all-time highs. ...

No, it’s not April 15th just yet. But I’m getting into that zone where I need to start sending relevant info to my accountant to get the ball rolling for my 2021 tax return.

I hate that I have to farm out my tax return preparation to a professional in order to get them done. I wish the US tax code wasn’t the way it was – who doesn’t?

But let me relate a little story to you that might get your mind right about whether or not to go it alone when doing your taxes…

I don’t remember the year, but it was somewhere around 2003-2004 when I first moved to Chicago. I had been using an accounting firm to prepare my tax returns since I began trading in 1998. But this year, I thought to myself:

“Sean, you’re smart. You’re college-educated. You almost minored in accounting, and you had straight A’s in all your accounting classes. You should be able to handle the filing of your own taxes!”

So I don’t remember if it was out of an act of curiosity, boredom, or just trying to pinch a penny, but I decided that year I’d prepare my own taxes.

I read all the official instruction manuals provided by the IRS. I gathered all my necessary trading documents...

From the desk of Willie Delwiche.

Key Takeaways:

• News headlines exacerbating underlying trends.
• Leadership rotation has accelerated in 2022.
• Time in the market is a waste of time if you are in the wrong market.

While the leaders of the last decade are weakening, the laggards of the last decade are gaining strength. Commodities are making new highs and Energy, which is the worst performing sector over the past 10 years, is the only sector in the S&P 500 in positive territory on a YTD basis. Globally, we are seeing strength and leadership from the rest of the world versus the US. Trends in Emerging Markets versus Developed Markets are as strong as they have been in over a decade. As we see these shifts, staying in harmony with the trend is critical. “Time in the...

Are you betting this trend continues?

Do you think Technology stocks can keep dominating like this, particularly vs Energy?

Most Americans are making that bet.

Look at your typical American portfolios. They own a bunch of Tech and almost no Energy.