From the desk of Willie Delwiche.

Key Takeaway: Risks remain elevated from a sentiment perspective. The bulls continue to hold court as bears are relatively absent despite their rise in recent weeks. Though there are signs that the extended reign in optimism may face a new challenge. Earnings revisions have ceased to rise, taking with it a tailwind that has accompanied the bulls for over a year. Without that tailwind, the possibility of a larger sentiment response to downside pressure on stocks increases. Lower prices have a tendency to beget a pessimistic outlook that in turn begets lower prices. This negative feedback loop could fuel a more complete unwind in sentiment than has been seen to date.

Sentiment Report Chart of the Week: Earnings Revisions Stall

Optimistic investors have been benefiting from the tailwind provided by steady upward trend in earnings revisions. That trend has not yet rolled over, but it has...

From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley

We held our September Monthly Strategy Session last night. Premium Members can access and rewatch it here.

Non-members can get a quick recap of the call simply by reading this post each month. 

By focusing on long-term, monthly charts, the idea is to take a step back and put things into the context of their structural trends. This is easily one of our most valuable exercises as it forces us to put aside the day-to-day noise and simply examine markets from a “big-picture” point of view.

With that as our backdrop, let’s dive right in and discuss three of the most important charts and/or themes from this month’s call.

...That's how we're supposed to do it, right?

JC & Strazza were riffing this morning on the strength in the Medical Equipment space and so we started brainstorming on some names to play since we expect the strength to continue.

There were a few names bandied about, but the chart and setup that most caught my attention was Boston Scientific Corp $BSX.

What I liked most was the recent consolidation which can act as a solid base of support for a move higher -- which would be all-time highs breaking out of a nearly 20 year base! As JC likes to say: "The bigger the base, the higher in space!" Seems this opportunity has a good shot at that:

That was quite the day yesterday...

We experienced $3.5B worth of long liquidations in the last 24 hours, with over $1.8B taking place in under an hour at the height of the crash.

Source: ByBt

Bitcoin's total open interest across all exchanges has fallen by a mighty 23%, and Ethereum's OI fell by 25%:

Source: Glassnode

Combined with this, we've seen a 21% reduction in the amount of futures contracts margined with US Dollars, along with a 7% drop in crypto-margined contracts.

That's a sizeable amount of leverage that's been flushed from the system in what can be seen as a healthy reset.

Bitcoin's aggregate average funding rate of perpetual futures positions has fallen into negative territory for the first time since July.

A funny thing happened back in May.

The Cyclicals stopped going up. You can see it in the NYSE Advance-Decline line, which has been falling ever since.

But you can really see it when you overlay the Industrials with Materials and Financials.

Chop Chop Chop:

This is the video recording of our September 7, 2021 Monthly Charts Live Strategy Session

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

In last week’s Currency Report, we highlighted the NZD/USD cross as a means to express our bearish US dollar thesis.

The setup was too good to resist taking a swing at following the recently failed breakdown. And so far, we’ve been rewarded for it. That’s information.

But it’s not the only cross that continues to trend well against the US Dollar. We see it all over, and it’s only reinforcing our bearish thesis.

As such, we want to look for more opportunities to take advantage of this developing theme.

In this week’s post, we’re going to do just that.

Let’s drill into our forex universe now and identify some of our favorite risk/reward setups we want to bet on to capture profits from a weakening US dollar. 

As the third quarter winds to a close, the bulls just took the lead for the first time since early in the 1st half.

Everything is clicking for them and they're in control of the game right now. While it's been a nice comeback, it's still just 52 to 48, so they have plenty of work to do.

I'm not talking about basketball. Not the Chicago bulls. I'm referring to stock market bulls and the current score on our risk checklist.

It's currently at its highest reading since we started publishing it back in June, so we'd be remiss not to write about it.

It's been a great roadmap for us in recent months so let's have a quick look at what it's saying now as well as some of the more recent developments that have taken place.

From the desk of Willie Delwiche.

Key Takeaway: New highs lists expand as global markets show strength. Economic recovery falling short of expectations. Bond yields look ready to rise.

• The Real Estate and Health Care sectors are relative strength leaders up and down capitalization levels. The Consumer Staples sector is a relative laggard across the cap scales.
• Health Care strength can be seen on the industry group heat map with positive readings for the Pharma, Biotech & Life Sciences group. While the Consumer Staples sector is weak overall, the large & mid-cap Food & Staples Retailing groups are improving.

One of the first lessons you learn in technical analysis kindergarten is the principle of polarity.

That is, former support turns into resistance, and vice versa.

The thinking here is that when buyers absorb all the overhead supply looming at resistance, the market has nowhere to go but up. When the market breaks out and retests that former resistance, it turns into support on the way down.

This language of supply and demand is true everywhere, but particularly so in cryptocurrencies, where there are no earnings, dividends, and discounted cash flow models to dilute the necessity of price.

So, with this all said, is this a textbook example of polarity taking place in Bitcoin?

From the desk of Steve Strazza @sstrazza and Ian Culley @ianculley

In last week’s Commodity Report we highlighted the Uranium ETF $URA and promised to dig up some trade ideas within this outperforming group of stocks.

While everyone was enjoying the Labor Day weekend, barbecuing, and watching football - we were pouring over our Uranium universe to uncover the best risk/reward opportunities in the strongest names. 

But hey, this is what we love to do!

So let’s dive right in and see what we found.

First of all, why do we like Uranium so much right now?

Both the Uranium ETF and the underlying commodity are showing leadership and breaking out of 6-year bases. That's more than good enough for us.

Now, let's look at some of the strongest stocks that we can use as vehicles to express our bullish thesis.

In any given market there is never a time when all constituents move up together and vice versa. There is always an internal substitution at play. It is this game of musical chairs that helps us identify the sectors/sections that are exhibiting outperformance.

Once we are aware of the outperforming nature of certain ticker symbols, it becomes easier to select our avenues of investment.

Keeping that in mind, we are here to discuss two representatives from the commodity universe that are displaying strength.