It's not just retail. Some of the most sophisticated crypto funds on the planet are blowing up. Lives are getting destroyed.
But here's a quick reminder: The best trades come when others are forced to exit and are at their lowest points.
Is it a nice way to make a living?
No. But you have to deal with it. Otherwise, you end up being on the wrong side.
The ETF providers in their infinite wisdom seem to be feeding on this sentiment, with the first short Bitcoin ETF being launched in the US this week. This feels awfully reminiscent of October, when the first Bitcoin futures ETF was launched.
Key Takeaway: More and more distribution patterns are resolving lower as bearish price action runs rampant across all major assets classes. Even the leadership groups such as commodities experience selling pressure as pessimism grows. Yet, while investors have expressed concern, they have not done much about it. Equity funds continue to attract inflows ($200+ billion YTD, according to DB) and households are hardly flush with liquidity. Perhaps it will take a second quarter in a row of being told not to look at their retirement account statements to prompt some investor action.
Sentiment Report Chart of the Week: Copper Looks Tarnished
There is probably a certain segment of the investing population that would look askance at me if I mentioned we're seeing "strength in China." They wouldn't believe that is possible. According to the news media they consume, China is "a mess." Perhaps that is true? But we only follow price here at our shop, and price is beginning to tell a different story.
Today's trade idea comes from TWO seemingly unlikely places: China and Internet! (what??????)
And when you see this chart of the Chinese Internet ETF $KWEB, you'll see why:
SkyKnight Capital Fund disclosed the purchase of approximately $1.6 million worth of shares in the home medical equipment company AdaptHealth Corp $AHCO, as it continues to build a position in the stock.
The fund now owns 8,906,070 shares, which represents a roughly 6.15% ownership stake in the medical devices company.
By focusing the vast majority of our research on price action, we're simply following money flow. We hate to sound like a broken clock, but if you're following something other than money flow, it's just noise.
Ignore it.
Money flow is by definition the only driver that impacts markets. That spans from price action, derivatives data, order flow, and, in the case of cryptocurrencies, on-chain.
Apart from that, all else is noise.
In this process, we typically have a rather binary view of markets.
"Above this level, we own it. Below there, we leave it alone."
We constantly say this for a reason.
We're not trying to be obnoxious in repeating itself. We are quite literally adjusting our thoughts based on money flow.
The market correction has extended over the past few weeks and the negative sentiment build-up is definitely not something that will fade away quickly. As more and more sectors move below their support zones, buy ideas are hard to come by. Today we're sharing a short idea from the financial services sector.
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.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
Whatever we’re looking for, the market has it.
If we’re searching for large topping patterns and strong downtrends, there’s plenty to go around, especially in the bond and stock markets right now.
Some people love taking the short side, feeding on the doom and gloom narratives accompanying the selling pressure.
But if that’s not your cup of tea, plenty of markets are trending higher. If you’re more interested in assets making new highs and like buying high and selling higher, look no further than the currency market.
When it comes to forex crosses these days, it’s simple.
All we have to do is put the US dollar in the numerator or place the Japanese yen in the denominator, and we get big bases that have either broken out or are on the verge of breaking out.
It’s that easy.
We’ve highlighted the yen in recent posts, so today we’ll switch gears and focus on a couple USD crosses from northern Europe.
