From the desk of Willie Delwiche.

I might be old school, but I like to look within the Financials sector for leadership trends that provide some clues for the path of the market overall. Specifically, I keep an eye on what Banks and Broker/Dealers are doing on an absolute basis but also relative to the S&P 500. The XBD bottomed versus the S&P 500 early last year and led the rally into Q1 2021. The BKX began leading a bit later, but its relative strength carried further into this year. Both now have rolled over and are moving lower versus the S&P 500. As we have shown recently, the XBD/SPX ratio tends to move with our risk on/risk off ratio and so a breakdown in the Broker/Dealer index may be a warning signal about the overall risk backdrop.

This is the video recording of our July 9th, 2021 All Star Charts Crypto Weekly Strategy Session.

When there aren't any bears left, the market has a funny way of creating new ones.

That's been one of the biggest questions from me over the past few weeks. Where did all the bears go?

Meanwhile, which asset class have investors been piling into the most this year?

This is the video recording of the July 8th Town Hall Meeting w/ Willie Delwiche & JC Parets

07/08/21 2PM ET

From the desk of Willie Delwiche.

You guys need to come see this...

That’s what an excited neighbor told us after randomly knocking on our front door earlier this week. 

We followed her out to our yard by the sidewalk to find a trio of scientists readying to catch and study a pair of Cooper's Hawks that have been nesting in a tree across the street. They constructed a trap with a net stretched between a couple of poles and a distress call playing over a loudspeaker.

First, the female swooped in, followed by the male. The hawks were quickly entangled in the net and the scientists began to band and measure them.

In an asset class where 80% drawdowns are a regular occurrence, it goes without saying you need to manage your damn risk.

By simply identifying a level where you get out of the trade, you are at a substantial competitive advantage, in this asset class more than any other.

There should be no shame in flipping your approach as new data comes in. At our shop, we pride ourselves on it.

But to the crypto junkies and laser eyes crowd, that'll get you called a "FUD'ster" or "paper hands".

Don't listen to these people.

They're truly worse than the gold bugs and permabears. They don't deserve your attention.

With any market, not just crypto, our primary goal is to make money. And to do that, in more cases than not, we have to play defense. It's what we're doing in stocks right now - it's just a regular part of putting money to work.

As for us, we've been bullish Bitcoin, and have been riding many coins higher.

We debuted a new scan recently- The Outperformers.

The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.

The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.

From the desk of Willie Delwiche.

Key takeaway: Record highs in equity indexes buoy investor sentiment that has remained optimistic without a significant challenge over the past year. Bulls ticked higher across our sentiment indicators last week, yet we still see evidence that risk appetite is turning (NAAIM Exposure Index, NASDAQ trading volume, overall levels of options activity). These new highs and levels of optimism must contend with the undercurrents of lackluster breadth measures and an absence of pessimism. Risks lie just beneath the surface. This raises the possibility of a more complete sentiment unwind when risks are realized and prices begin to falter.

Sentiment Report Chart of the Week: Know What They Say, Watch What They Do

One of the best ways to measure actual sentiment is to watch what investors are doing with their money. Through the first six months of the year, equity ETF inflows totaled nearly $350 billion, with inflows to...

The latest All Star Charts "Follow The Flow" report is out, and once again there's a great looking opportunity there that caught my eye.

In a nutshell, the Flow report is looking at "a list of stocks that large financial institutions are putting big money behind (via options)… 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."

The opportunity setting up now is in a stock in a sexy sector that looks like it's ready to resume the rocketship ride it embarked on in 2020.

Here's the rule of thumb with these things:

Just because there's no divergence in the A/D line doesn't mean the market can't correct. But if there's a divergence in the A/D line, you better pay attention.

That's what's happening here.

Remember, at first it was just the Nasdaq Advance-Decline line diverging. This one peaked back in early February. Notice how we had a divergence before the COVID crash as well:

Money flows to where it's treated best.

In the case of crypto, it's recently been the Altcoins.

Yesterday, we published a bullish note on the DeFi space, and throughout the last few weeks, we've been bullish on smaller coins down the cap scale.

When you dive under the surface and look beyond Bitcoin, there's some serious strength.