There are stocks going up and there are stocks going down.

I'm old enough to remember when we would all call that normal.

The going up category just got longer recently. Remember Energy had been the only Sector Index above its 200 day moving average.

Healthcare is now also on that list.

Industrials and Consumer Staples are the next closest ones.

This morning we talked about how poorly the Tech heavy Emerging Markets were doing vs those like Brazil, Saudi Arabia and Indonesia, that have a much different composition.

The difference in performance is off the charts.

There are big winners and big losers.

Another big loser driving headlines is in Large-cap Growth. Stocks like Google and Facebook got crushed after earnings. And now Amazon is joining that list after the bell Thursday.

But that's specifically Large-cap Growth.

Small-cap Growth, on the other hand, is holding up way better.

You can see here how Small-cap Growth is hitting the highest levels of the year relative to Large-cap Growth:

From the Desk of Ian Culley @Ianculley

Bonds have stopped falling across the board!

That doesn’t mean it’s time to go all in. Tactically, it’s difficult to get behind this week’s near-term strength. 

Right now, we’re looking at just a few days of bullish price action. And where do we define our risk?

We have to know where we’re right and where we're wrong before we get involved in any investment. 

Thankfully, high-yield bonds answer this all-important question.

Check out the daily chart of the High-Yield Bond ETF $HYG:

Unlike most bonds, HYG has formed a small reversal formation.

You certainly see it in life - the losers usually continue to lose. And winners win.

It's the same thing in the stock market. Winners tend to keep on winning, and the losers remain losers for a reason.

With the whole ESG scam unraveling over the past couple of years, the market has voted with their dollars.

That's what pays.

Not cute bed time stories. Actual Dollars.

Forget the narratives. I want to know what investors are ACTUALLY doing.

And as we have documented here consistently, the voting dollars are being used to buy Energy.

But I continue to be impressed with the strength in Energy stocks, despite the correction we've seen in Crude Oil Futures.

Look at that relative strength:

Bear markets are infamous for their counter-trend rallies.

Breakouts fail, and the charts are painted with false moves.

Throughout this bear market, traders have bought the breakouts to then dump the next day into an illiquid tape.

Given the gains we've seen over the last few days, I think it's important we step back.

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.

Here's what that looks like:

Welcome to the 2 to 100 Club.

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.

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.

From the Desk of Ian Culley @IanCulley

The dollar is dropping!

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.

Let’s take a look.

This is still the one folks.

I've been in the camp that we're only getting bull markets in stocks around here if the Dollar is falling.

And well, a funny thing happened last month: The Dollar started falling, particularly against the most important crosses.

This happened once the journalists finally realized the Dollar had been so strong. And you know what tends to happen when they finally get the memo ;)

Take a look at the Dollar rolling over vs both the Euro and British Pounds:

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: 

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?

How do we know if we're in a bull market or not?

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?

It really is that simple.