I understand the theories about Crypto Currencies being a scam.
"The whole thing is about to fall apart", they tell me.
And yea maybe.
That's entirely possible.
I don't really care that much either way. If it goes up, I hope to profit from it. And if all the coins go to zero, I'll make sure I'm not in them.
Other people losing money long crypto in that scenario is not my problem. I don't have the slightest interest or the time to care about other people's portfolios.
And I say that only to reiterate that I'm approaching this conversation with a very open mind.
Because we all know that the Bitcoin maxis and Ethereum folks can rarely have a civilized conversation, particularly with those who might disagree.
So to be clear, I do not care at all.
I'm much more interested in what's for dinner tomorrow than I am worried about whether Bitcoin is going to a million or zero.
Now with all of that out of the way, I think you have to be out of your mind to be short BTC or ETH if they are above their prior cycle's peak.
As many of you know, something we've been working on internally is using various bottom-up tools and scans to complement our top-down approach. It's really been working for us!
One way we're doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small- to mid- to large- and, ultimately, to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn't just end there.
We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
The S&P 500 this month and last undercut its June low but it is now back above that key level. The same can be said from a sentiment perspective. The NAAIM Exposure index and the Bull-Bear spreads for Investors Intelligence and AAII in recent weeks dipped below their Q2 lows but have since recovered.
We continue to be handcuffed by earnings season. Some of the best setups we like right now are in stocks slated to announce earnings over the next week or two. As an options trader, I don't like to position ahead of imminent earnings announcements. That is tough binary risk to control.
Today's trade has earnings coming up in a little over a month from now, so that'll have to do. At least it gives us some time to build a little cushion. Because if we're wrong in this trade, it's likely we'll find out pretty quickly over the next two weeks.
We retired our "Five Bull Market Barometers" in 2020 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.
This week we're looking at the stock from the capital goods sector. Stocks from his sector continue to show strength in a consolidation type of market setup.
It’s finally time to bet on some sustained downside action, and the euro is my vehicle of choice.
I laid out the conditions that would flip my outlook on the euro earlier this month. Three weeks later, the pieces have fallen into place for a bullish position.
I was talking with a relatively new day trader last night at my twice-monthly trader meetups here in Colorado. We were chatting about stop losses. Or more specifically, his inability to stick to his “mental stop loss levels.”
As you can imagine, this was leading to him taking occasional big losses – which were wiping out good runs in the market.
He’d make a few hundred bucks several days in a row. He’d then lose it all (and then some) on one bad trade.
A lightbulb went off in his head when I reframed the importance of not taking big losses. No doubt many of you are shaking your heads and uttering – duh!
But for this gentleman, it took me breaking it down this way for him to get the picture:
