I'll admit it. I'm a Fed-watcher from way back. I enjoy it as much as anyone, and probably more than most (especially those within the All Star Charts community).
While I never had to analyze the weekly money supply numbers to figure out what the Fed was doing, I've remained attentive as the Fed has revamped its mode of communication with the market time and again.
The latest iteration -- a written statement and press conference after every FOMC meeting coupled with summary economic projections released four times a year -- reflects the Fed's desire for transparency. It also supports the belief that forward guidance is a powerful tool at a time when interest rates are stuck near zero.
Market participants listen, absorb the message and the forecasts, and react. We did this dance again this week.
Here’s the latest batch of forecasts from the Fed:
Are the bears trapped, and now we rally on higher?
As we've said for those with shorter-term time horizons, there's nothing wrong with taking a swing if Bitcoin's above these lows.
The bears in the derivs are growing too, with funding rates across all exchanges falling back into the negative territory despite Bitcoin's recovery into the day.
Key Takeaway: Optimism has begun to cool as sentiment relieves the excesses of early summer. Yet, we are a far cry from a complete unwind that cyclical damage suggests is necessary. As investors become more risk-averse, we are looking for evidence that pessimism has become widespread and excessive (more II bears than bulls, NAAIM Exposure Index reading below 30, ETF outflows close to or below zero on a 4-week basis, and a daily close in the VIX greater than 30). Though there is certainly an increased level of caution and concern among market participants, we haven’t seen a degree of fear or pessimism in any of our indicators that point to the warranted rebalance. For now, risks remain elevated as sentiment swings toward pessimism.
"I like an $IWM November 200/205/235/240 Iron Condor for an approximately $1.80 credit. This means I’ll be short the 205 puts and 235 calls, while protected by the 200 puts and the 240 calls. This is a defined risk trade where the most I can lose is the maximum possible value of the spread (distance between short and long strikes — $5.00) minus the credit we receive at initiation ($1.80) which equals $3.20."
To learn more about the trade and the thinking behind it, click below to watch a replay of the Live Stream.
Have you ever held a beach ball underwater and pressed down?
You can feel the pressure on your arms - the beachball is trying everything to float back up.
So what happens when you let go? It jumps into the air!
Once that pressure holding it down eases, it has nowhere to go but up.
The market is the exact same.
When everything's selling indiscriminately, we want to look for the sectors, stocks, or in this case, cryptocurrencies that are bucking the trend and pushing up against your arms.
So what's going to happen when that selling, that force holding the beach ball gives up?
It's gonna shoot higher!
That stock or cryptocurrency closing the day higher in the face of broad distribution is likely to be the next leader when that force holding everything down subsides.
With volatility rising this week, I've been on the hunt for opportunities to "safely" sell some premium.
While there is no such thing as a sure bet in the markets, selling elevated premium in rangebound securities is one of the closest things we will find to that idea.
I was chatting with my partner Steve Strazza this morning and when I told him what I was looking for, he immediately responded: "Oh -- you want $IWM. That is the very definition of sideways action."
Sure enough, he's right. And upon closer inspection of the options chains, there is some good premium offered for sale if we're willing to go a little further out in time.
The Outperformers is our newest scan that pinpoints the very best stocks in the market. It’s the fastest, easiest way to find quality names that are primed for major moves.
The goal is that as the market rally progresses, the sector rotation within the market will reflect in this scan. So while our Top/Down Analysis helps us with the broader view of the market, this Bottom/Up scan makes sure that we catch the slightest change in sentiment.
If you've invested in this stock, then you know that such a move in ITC is not that common. And more often than not, the follow-through move is generally absent.
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
In recent weeks, the market has taken a risk-off tone as dollar-denominated risk assets have come under increasing pressure.
Major US stock indexes have pulled back, and procyclical commodities such as crude oil and copper continue to chop around beneath overhead supply.
Interestingly, we haven’t seen much of a bid in defensive assets through the recent bout of downside volatility. US treasuries have been relatively quiet, and the dollar remains below its August highs. Meanwhile, bond-proxy sectors like Utilities and Staples continue to make new relative lows.
None of this suggests the kind of defensive positioning that would be typical in an environment where risk assets are getting hit.
But what about one of the most significant safe-haven assets of all... the Yen?
Let’s take a look at how the Japanese Yen is setting up against other major currencies right now and what it could mean for the market at large.
Portfolios positioning reflects cautious message from weight of the evidence.
Watching to see if evidence argues for increasing exposure or getting more defensive
When volatility picks up, there can be a natural desire to review and reconsider or reduce all long exposure. This impulse reflects the reality that for many, risk tolerance is higher in periods of strength than in periods of weakness. Our view is that proactive risk management can lead to better outcomes than reactionary decision-making.
That is a major reason why we spend so much time reviewing and discussing the weight of the evidence. We don't know what the future will hold, but we can increase the odds of looking in the right direction by watching where the wind is blowing. While always open to new information, we do not want to over-react to a situation that has already been accounted for.
From the desk of Steve Strazza @Sstrazza and Ian Culley @Ianculley
Last night we held our September Monthly Conference Call, which Premium Members can access and rewatch here.
In this post, we’ll do our best to summarize it by highlighting five of the most important charts and/or themes we covered, along with commentary on each.
