We came into the week anticipating some volatility expansion out of this range, which could potentially be playing out given yesterday's action.
This was the largest daily price change for most coins over the last month. Ethereum's broken out of this short-term trading range, with Bitcoin following closely behind.
Many stocks are no where near their all-time highs.
The S&P500 still needs to rally 25% just to get back to its former highs. And that's after the 10% rally that we've already seen in October.
The Nasdaq100 would need to go up another 43% from here just to get back to its highs. And again, that's after it already ripped 12% off its lows this month.
Remember, the average Nasdaq stock fell 44% from its highs during the bear market. The average small & micro cap stock dropped about 50%.
And since most stocks are so far from their highs, investors are having a hard time calling this a bull market.
"They need to make new all-time highs for it to be a bull market", they say to me.
So ok, let's play that game.
None of these prices here below were new all-time highs. So was this a bear market then?
Stocks and bonds are enduring one of their worst years on record. Yet the St. Louis Fed’s Financial Stress Index dropped to never before seen levels. It’s off its lows but still indicates less stress in the financial system than at any previous point in the past quarter century.
Why It Matters: Aggressive tightening by central banks around the world has pushed sovereign yields higher and kept interest rate spreads subdued. That has made financial stress less apparent. Until this changes, there is little impetus for the Fed to pivot away from its intense focus on bringing down inflation.
In taking a Deeper Look we see how the specific characteristics of this cycle may be masking signs of stress that are present just beyond the headlines.
It's nearly that time when we get a fresh batch of monthly candlesticks.
We only perform this exercise once the candlesticks are completed. But, sometimes, you want to cheat and peep a few days early.
What's great about monthly candlesticks is that it takes us a mere half hour to get through them all, which is only six hours a year.
We can't emphasize enough the level of value-add for such a brief amount of time.
It forces us to take a step back, and it gives us no choice but to identify the direction of the primary trends. We use them to put shorter-term trends into context, which is especially important in this choppy price action.
So, no matter your time frame, identifying primary trends and then working from there is a huge advantage over a blind bottom-up approach.
In the current state of the crypto markets, the overwhelming majority of names are in greater than 80% drawdowns.
Generally speaking, more stocks are going up than going down in bull markets.
And sure, there are a lot of different ways to quantify it, but this is really the gist of it: Are more stocks going up or are more of them going down?
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.
