Nifty 50 witnessed a strong move of 4.74% on Monday as the index bounced back from lows to close near the high of the day. Does this change the way we look at the short-term trend in the market?

Read on to know more.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

At the beginning of each week, we publish performance tables for a variety of different asset classes and categories along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

As we discussed in our latest report, bears are running out of any substantial fuel to support their position.

And despite the arrival of some long-awaited selling pressure last week, that absolutely remains the case.

From a more tactical standpoint, though, we're seeing early signs of some volatility moving into what is a seasonally weak post-election month.

In this post, we'll play "devil's advocate" and lay out some of the more bearish developments we could find out there right now. You know... the kinds of things that could start to...

In case you didn't see my Saturday morning note, it seems to have struck a chord with a lot of people.

You see, somewhere along the way, people ignorant to reality just assumed that if we did a better job of educating investors, then it will prevent them from making reckless decisions in the stock market.

It's so adorable to believe that.

I mean, you can tell yourself it's all rainbows and butterflies, if you want to. You have that right.

But it's complete nonsense. The truth of the matter is that it's an ugly world out there. Grow up.

You can try to help these people all you want. It's not going to matter. That's just not how humans work.

I reached out to a colleague who's much better on the science side of this, and here's what he had to say,...

During a quick perusal of ETFs today, I noticed some extremely rich volatility being priced into options on the Retailers ETF $XRT - which isn't entirely surprising given the price action over the past week.

While volatility can certainly continue here, my gut tells me the premiums will fade away soon. Implied volatility is driven by fear and greed, but eventually the marketplace adjusts to the "new normal" and the premiums people will pay for volatility they are now used to will subside. This is where it can be advantageous to put on delta neutral credit spreads.

From the desk of Steve Strazza @Sstrazza

In a further effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."

We write a post every other week where we outline some of our favorite setups from the watchlist.

We've already had some great trades from this universe and couldn't be happier about the early feedback.

Moving forward, we'll be rotating this column with "Under The Hood" each week.

In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort the stocks by their percentage from new highs. Easy done.

And what better time than now to launch a small-cap focused column!? We've seen very strong evidence of a structural rotation down the market cap scale, suggesting a new period of outperformance from small-caps in the...

In light of this week's events, I hope it’s become more clear than ever to you that it is MUCH MORE important for traders & investors to focus on the behavior of markets themselves, instead of the goods and services in which the market deals. 

Technical Analysis represents the former, while "fundamental analysis", we're told, represents the latter. 

I came to this revelation in 2005 when my $MECA completely collapsed because some activist hedge fund manager wasn’t able to accomplish the things he said he would or that we were betting on him doing.

I lost like 70-80% or something like that. Plus, you have to include all the opportunity cost in me not owning the other things, considering it was an epic bull market and I was sitting there buying this p.o.s. $4 horsetrack in Baltimore 

You live and learn right?

Now you know part of the reason why I am the way I am. 

This week we're looking at one long setup and one short setup. The sectors we're focusing on this time are Manufacturing and Media.

As long as the short-term weakness in the market is in place, we will look for selling ideas that fit our risk management and time frame prerequisites.

We retired our "Five Bull Market Barometers" in mid-July 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.

From the desk of Louis Sykes @haumicharts

Call me a young naïve trader drunk on a bull market, but I don't think it's necessary in today's world to blow up in order to learn.

Hear me out.

Back in the '90s and early 2000s, you read a book and experimented with your account through trial and error. But today, we have widespread democratization of financial information that just wasn't around back then.

Given that this new generation of traders have endless routes of online resources and a completely transformed avenue of education, I don't think there's any real need for that.

Those who've been cynical on this trend have been dead wrong.

Retail has been the big winner.

The hedge funds got Tesla wrong. When TSLA didn't meet their standardized Wall Street mold, they didn't give a second look and proceeded to miss one of the best trades of the last few years.

And what about Bitcoin? It was retail that got to the party early on that one, too. For a symbolic change, you had the institutions chasing retail, not the other way around.

From the desk of Steve Strazza @Sstrazza

As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.

Different market environments, naturally, are more conducive to certain scans and less so to others.

For example, running our "Short Scan" right now is an absolute waste of time (which in itself is information about the current state of the market). On the other hand, our "Minor Leaguers" is perfect for the current environment due to its focus on Small-Cap stocks.

Our "Squeeze Scan" is also absolute gold for the current market. While Gamestop $GME is stealing all the thunder these days, it's not the only stock being propelled higher by short covering. It's happening more or less across the board in the most shorted names.

In fact, if you were to treat these hated stocks as a basket, they'd be outperforming even the strongest industry groups right now.

JC and Howard discussed the topic in this week's Happy Hour video which you can...

I think we can all agree that we learned something this week.

No matter who you are or how long you've been at this, we all learned SOMETHING after this week's events.

Some investors learned about short selling and short squeezes (my wife, for example). Others now have a better understanding of how brokers work and the fact that pretty much all of them sell their order flow. None of this is anything new to us, of course, but it is to a lot of other people.

I personally learned more about some of the Dodd Frank regulations, almost by osmosis. I mean, how could you not? But I realized that I officially care less about all that stuff than I did before. Talk about boring!

Anyway, the funniest part of the whole thing has to be the people screaming for more investor education to prevent this irrational behavior in the future. "We have to protect investors from themselves", "Brokers need to educate their clients"....etc etc

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

The market is giving us absolutely no reason to play defense right now.

Regardless of the asset class, it's the risk-takers that are having their way in this environment.

Investors stretching out along the risk spectrum is a point we've been hammering home for some time now, particularly in our weekly RPP Reports - like this one.

Not only is this true on absolute terms, but we're also witnessing cross-asset relationships progress higher and in favor of risk-asset which can only be taken as a positive.

It's not often we see all asset classes in agreement with each other, but when we do, it's a significant driving force that supports the risk-on trade and suggests higher prices to come.

In a piece from a few weeks ago, we explored the absolute trends in the ...