Key takeaway: A “no fear” attitude envelopes a market marred by mixed signals and deteriorating breadth. Large-cap indexes push to new highs while small and mid-caps trend lower. We even see an expansion in new lows further down the cap scale. But on the surface, optimism shines. Yet, challenges could lie ahead as a lack of risk-seeking behavior suggests a weariness among investors, and seasonal tendencies lean toward a lackluster performance in the coming months. For now, equities remain the popular choice among market participants as investor sentiment obscures the fragile reality beneath the surface.
Sentiment Report Chart of the Week: Investors Love Equities
These are questions almost everyone who's been involved in crypto has asked themselves and felt, at one point or another.
Some call it a lack of discipline or FOMO, but it's really all about managing future regret.
This dynamic is undoubtedly present in other asset classes too. Still, it's put on full display in this space, where people are made to believe that regularly achieving 10x baggers is a normal occurrence.
The returns people feel they can obtain by holding coins in this space are largely based on a perfectionist mindset which is both unhealthy and unrealistic.
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.
This All Star Charts +Plus Monthly Playbook breaks down the investment universe into a series of largely binary decisions and tactical calls. Paired with our Weight of the Evidence Dashboard, this piece is designed to help active asset allocators follow trends, pursue opportunities, and manage risk.
A little more than a month ago, we began to see broad-based strength in USD emerge on both a short and intermediate-term basis.
Since then, it’s been the central theme in currency markets.
But we're starting to see signs that this near-term US dollar dominance could be fading as bulls have had ample opportunity to push the USD higher in recent months but have made little progress.
The lack of follow-through can be seen in our long USD trade ideas from late June, as most are not working. We recently saw many crosses reach our risk level, but price rebounded instead of triggering an entry. The EUR/USD is a great example of this.
Of course, in the crypto world these adages don't make too much sense. So, just like how we say that "Tether's a position too,"in crypto it can be said that "patience pays sats."
But all jokes aside, Bitcoin has fallen back below 41,000, placing prices right back into this range. With Bitcoin below this level, new longs are likely to stumble in the coming days/weeks.
At least in the near term, some level of patience is warranted.
So while we're anticipating we ultimately resolve higher, the only question that remains is "how long?"
This is one of our favorite bottoms-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 in their direction and make them a pretty penny.
