As we progress into Q4 of Fiscal Year 2021-2022, this playbook outlines our thoughts on every asset class and our plan to profit.

This playbook will cover our macro view, touching on Equities, Commodities, Currencies, and Rates, as well as outline our views on the major nifty indices and the sector/thematic indices.

We also cover individual stocks we want to be buying to take advantage of the themes discussed in the playbook.

In yesterday's note, we outlined how we're approaching the market in the aftermath of this volatility.

Bitcoin remains stuck between strong support in the low 30,000s and resistance around 42,000.

Unless we're buying dips to the lower end of the range or a break above this resistance zone, there's not a whole lot to do in terms of trading either Bitcoin itself or most of the individual alts.

This message most certainly remains relevant despite yesterday's recovery.

But in evaluating the names leading this recent bounce, relative strength has been concentrated in names we've been pointing to in recent weeks.

Names like Cosmos $ATOM, Terra $LUNA, and Fantom $FTM all held up reasonably well in relative terms and have also been leading this recent recovery bounce.

These are three of the best-looking names in the entire asset class from a relative strength perspective.

We anticipate that if the market continues this bounce, these three names will lead the recovery higher.

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This week we’re looking at a long setup in the sugar stock, which remained resilient in market drawdown.

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

From the desk of Steve Strazza @Sstrazza.

Welcome to our latest Under the Hood column, where we'll cover all the action for the week ended January 21, 2022. This report is published bi-weekly 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.

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From the desk of Willie Delwiche.

Key Takeaways:

• First 10% correction in two years signals the end of an extended period of relative calm for stocks.
• US breadth is slipping while global breadth is more resilient.
• Recent stock market volatility is unlikely to knock the Fed off course.

Breadth deterioration was not just a story for the second half of 2021, it has persisted, with twist, into 2022. The persistence: more and more stocks on both the NYSE and NASDAQ have been making new lows while fewer and fewer industry groups in the S&P 1500 have remained in up-trends. The twist is that while breadth trends in the US are deteriorating, global breadth has been more resilient. Nearly half of the stocks in the MSCI Europe index are trading above their 50-day averages while for the S&P 1500 it is less...

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...

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:

• This week, our macro universe was red as 66% of our list closed lower with a median return of -2.22%.
• The Volatility Index $VIX was the winner this week, closing with a massive 50.34% gain.
• The biggest loser was High Beta $SPHB, with a weekly loss of -8.87%.
• There was a 29% drop in the percentage of assets on our list within 5% of their 52-week highs – currently at 26%.
• 51% of our macro list made fresh 4-week lows...

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.

Bears Take Control

Last week, we wrote about the importance of bulls defending the September highs in the S&P and other large cap averages. They didn’t. Instead, prices cut beneath these potential support levels with ease. Another area of importance we’ve been watching since last year is the 2021 lows in the Russell 2000. After being tested at least 6 times, sellers finally took control at this ~210 level in recent sessions. For now, none of the major averages in the US are above our tactical risk levels. We’ve seen a change in character during this correction as bears are becoming more aggressive. This is illustrated by momentum hitting extreme oversold conditions in all of the major indexes. We always want to respect our risk management levels, and currently they are telling us we can’t be long these indexes....

There you go.

I wrote that headline to save you the trouble of turning on your TV or following your favorite fear mongerer online. You're welcome.

Unless you've been lost in the wilderness for the last two weeks (not a bad place to have been, btw), then you no doubt know the bulls are currently in trouble.

The fake-out breakout in the Russell 2000 $IWM has turned into a full-blown route, the S&P 500 is testing levels last seen at the end of September and early October, and $VIX has printed the highest levels of the year. There's not a lot to be optimistic about right now -- especially if you're holding a bunch of long positions that are at or near stop-out levels like I am.

I got stopped out of a bunch of positions last week, two today (a long call spread in $STX and a short strangle in $XLK), and a couple more might get exited tomorrow if things don't stabilize here.

Into this maelstrom, we've been dialing back putting on new positions. During last week's holiday-shortened trading week, we only put one new position on -- and that may have been one too many ;)

Every bear market has a culprit.

There's always that one sector or group of stocks that drags the rest of them down.

In 2007, for example, it was Financials and Homebuilders. In 2000, of course, it was Tech and Growth.

This time around, it's been Small-cap Growth, and overall underperformance from Growth in general.

But these 4 are the ones we've been pointing to as good representations of this cycle's culprit, or potential culprit anyway. You never actually know until afterwards.

Since stocks peaked last February, the evidence has been pretty clear that these are the ones that paint the best picture of what's been going on over the past year:

Over the last two weeks, we've outlined how we've been patient in buying dips.

Given the lack of demand observed on-chain combined with the growing macro uncertainty, the dip back to the low 40,000s appeared to be a low-conviction buy.

Since publication of those two notes, Bitcoin's subsequently lost a critical level of support and now hangs in a no man's land.

The same themes we've discussed over the last two weeks remain intact, so this report will serve as an interim update.

This is probably as good of a time as ever to get back to basics.

Let's try to remember what this is all about.

What the hell are we doing here anyway?

I won't speak on your behalf, but I'll tell you the way I look at it.

The reason Technical Analysis works is because we're identifying trends.

And Prices trend.