Perhaps you’ve noticed that I don’t use moving averages.
For starters, I don’t like the way they look.
They muddy the pristine waters of price. And if I can't pick up on the underlying trend by looking at price action, then god help me.
Regardless, I do my best to stay open-minded. Everyone has their own process. Mine works for me, but that doesn’t make it superior by any stretch.
So, when Grant @GrantHawkridge dropped a US Dollar Index $DXY moving average crossover study in our analyst Slack chat last weekend, I couldn’t resist.
It wasn’t because it highlighted the “death cross” (when a 50-day moving average falls below a longer-term 200-day average), which always stirs a great deal of excitement.
Nor was it what his study suggests for the dollar in the coming weeks and quarters.
Rather, it’s what it implies for US stocks.
Check out the chart of the DXY with a 50-day (blue line) and a 200-day simple moving average (red line):
Maybe you have some long-term holdings showing significant gains that you don’t want to pay taxes on. But you want to squeeze some additional income out of these positions because either you’re greedy (fine) or you want to practice responsible risk management (a better reason).
That’s fine. Go ahead and continue selling covered calls from your yacht. You do you.
This post is aimed at the rest of you knuckleheads who seem to think entering covered call trades as tactical short-term plays is a productive use of your time and capital.
The shorter-term risk indicators have teased the possibility in recent weeks, but now for the first time in a year, our longer-term Risk Indicator has moved into Risk On territory.
More Context: This risk indicator is made up of 20 (intermarket and intramarket) ratios that pair various risk on and risk off assets. It ebbed and flowed over the course of 2022 but remained in Risk Off territory all of last year. Paired with the turn higher in our net new high advance/decline line, this is evidence of an improving backdrop for risk assets. These are not discrete signals (like so many breadth and momentum thrusts) but are continuous indicators of the environment in which we, as investors, are operating.
The largest insider transaction on today’s list is a Form 4 filing by Abdiel Capital Management LLC, which reported a purchase worth roughly $8.7 million in Appian Corporation $APPN.
The hedge fund now has an ownership stake of nearly 12%.
Bitcoin had its best week in two years, with the orange coin rallying 22%. Many coins followed suit, with names like Solana gaining a whopping 60% last week.
In this weekly note, we highlight 10 of the most important charts or themes we’re currently seeing in asset classes around the world.
Bitcoin Bounces Back!
Bitcoin has been on an absolute tear, gaining roughly 25% since last week and booking seven consecutive up-days. Not only is price reclaiming its prior cycle highs from 2017, but momentum (as measured by the 14-day RSI) is registering its highest reading in two years. As shown in the table, price has also reclaimed its 200-day moving average, ending the second longest streak on record spent below it over the course of 2022.
From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts
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.
