From this week's Follow the Flow report, it's clear that options players are betting on the house!

And recent market action is giving us a nice pullback to get positioned into, increasing our odds of success if the dealer plays his cards right.

So let's take advantage of the price action and position ourselves to win.

Somebody tell the waitress to send over another round of complimentary drinks!

Yesterday's report, which you can read here, laid the groundwork for today's note. 

To summarize, we're of the strong view that there's little to no edge in pushing directional bets in this tape.

Because Bitcoin's lost all momentum, we anticipate more weeks of ranging and contracting price action that's likely to involve a high concentration of whipsaws.

This is not a market conducive to aggressive moves.

The vast majority of crypto investors are better served by not pressing trades.

However, in today's note, we'll discuss market-neutral trades that can quietly yield results in periods where absolute price trends hold little edge for directional bets.

I was in a meeting a couple of weeks ago where I was going over the geographic locations of all the members of our team. These places include California, Florida, Colorado, Venezuela, Canada, Australia, New Zealand, Mumbai, Delhi, South Africa and the list goes on....

The gentleman asked me how I was able to find all these people.

When I told him I just sent out a tweet whenever I needed to add someone, he almost fell out of his chair.

For me this is just common sense. Others are still coming around to the power of social.

We are a team of almost 30 people now.

And we're looking to add another one, if you or someone you know is interested.

The market hasn't been easy off late and a sideways move means that market participants get trapped more often than not. Today we have a trade setup from the Chemicals that has some eyeballs on it. We thought this might be a good time to check it out.

Let's take a look at the trade for this week!

We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.

This is that post, so let's jump into this week's edition.

In last Monday's report, we pointed out a handful of bearish developments but restated our neutral outlook on the crypto market.

We noted that there was demand coming from spot, while futures were still in the process of selling.

This continues to be the key theme to monitor; selling spot no longer appears to be the primary way savvy and large investors are going to cash.

Rather, they're doing it through shorting calendar futures driving down Bitcoin's term structure.

Since then, we've seen Bitcoin lose our risk level of 41,000 and are positioned heavily in cash.

We're anticipating a longer period of sideways price action, and this is a tape conducive neither to trading nor to establishing aggressive long positions.

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 February 18, 2022. This report is published biweekly 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-the-scenes look at our process.

Whether we’re measuring increasing interest based...

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...

It's a big world out there.

Our portfolios don't have to revolve around what's happening in silicon valley.

That was maybe a good way to think the past 10 years, but that's a terrible way to think today, and potentially over the next 10 years.

I have no idea. And neither do you. So maybe it will be helpful to try and keep an open mind.

But in the meantime, let's worry about the now.

From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Industrials Are On The Ledge

Industrials are currently trading at their lowest level in over 10 months. In the large cap space, there are lots of charts that are still consolidating in the very same ranges they’ve been in since the first-half of last year. Both cap-weighted and equal-weight industrials fall into this category. In order to turn bullish on the broader market, we need to see more areas resolve these ranges to the upside. But in order for that to happen, they need to hold the lower bounds of these patterns in the meantime. As the list of sectors and industry groups that are resolving lower grows, it becomes easier to make a bearish argument for stocks as an asset class. Seeing industrials break down would also be a major development due to their high correlation with the S&P 500. The bottom line is that these ranges need to hold, otherwise we’re likely headed for an environment where the overall...

From the desk of Steve Strazza @Sstrazza

Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.

By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.

Let's jump right into it with some of the major takeaways from this week's report:

* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.

Macro Universe:

• Our macro universe was slightly red again this week as 62% of our list closed lower with a median return of -0.27%.
• This week, lumber $LB was the winner, closing with a 7.83% gain.
• The biggest loser was Oil $CL, with a weekly loss of -2.18%.
• There was a 4% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 17%.
• 15% of our macro list made fresh 4-week highs, 9% made new 13-...

On this episode of Pardon The Price Action, we continue to see cyclical stocks showing relative strength and popping up on our new highs list.

Are you still stuck in American Growth stocks, or have you moved on?

Metals and Mining stocks are also breaking out to new highs, both in the U.S. and Internationally.

The U.S. is the worst performing country in the Western Hemisphere in 2022. Are you paying attention?

Where do we go from here? What are we buying? What's the next move?

All this and more on this week's episode of Pardon The Price Action.

Check out the full video: