Monday night we held our April 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.
Defensive areas we would expect to underperform in the current environment such as utilities and REITs are actually outperforming.
And the names we would expect to do well – specifically banks – can’t seem to catch a bid on either absolute or relative terms.
This is concerning from a broader intermarket perspective. But it’s not the complete story.
While our stock market ratios are not supportive of higher rates, when we look within the bond market, we’re seeing the opposite.
Not only is there a synchronized global rally in interest rates, but the intermarket evidence from our bond market ratios supports this action and indicates a healthy degree of risk appetite.
Today we're going to highlight one of those bond market ratios – high-yield vs. investment-grade debt.
If you've ever been deep in the trenches slinging cryptocurrencies, chances are you're well aware of the infamous liquidation cascade.
For some traders, the thought will send shivers down their backs.
To others, it represents one of the most profitable asymmetries in supply and demand.
What's a Liquidation Cascade?
The Chicago Mercantile Exchange (CME) is the largest and most sophisticated derivatives exchange for several traditional financial instruments and Bitcoin futures contracts. But there are stringent rules bounding these contracts:
Each contract is 5 BTC (currently just over $200,000).
The market is only open Monday through Friday.
Clients tend to have a good relationship with a broker that's allowed to trade on the CME.
These rules are essentially a risk-mitigation strategy.
In the case of liquidations, if the account reaches negative equity before the liquidation is finished, the trader is liable for the negative amount.
When investing in the stock market, we always want to approach it as a market of stocks.
Regardless of the environment, there are always stocks showing leadership and trending higher.
We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.
The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too.
We already have multiple scans focusing on stocks making all-time highs, such as Hall of Famers, Minor Leaguers, and the 2 to 100 Club. We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics.
Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports. Now, we're also highlighting lagging stocks on a recurring basis.
Don't take my word for it. Check it out for yourself.
Sentiment has only been this bearish four times over the last 40 years: Coming out of rampant 1970's inflation, the Savings & Loan crisis of the early 90's, the Great Financial Crisis of 2008-09, and the "Fiscal Cliff" circa 2012.
Do you remember those times?
And you see what happened in the S&P 500 after, right?
Is history going to repeat itself? And if so, how do we protect ourselves and our portfolios from the "risk" of being underinvested if that happens?
From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley
The US Dollar Index $DXY resumes its relentless march higher.
But the full story surrounding the dollar’s dominance is a bit more complicated.
Lately, we’ve been pounding the table about the narrow scope of the DXY, as 83% of its weightings come from just three currencies – the yen, the pound, and the euro.
All three continue to lose ground versus the dollar, and this is exactly what's driving the rally at the index level.
While this remains the case, we’re starting to see USD strength expand beyond the major components of the DXY. We're also seeing some nice long-term patterns materialize that favor the US dollar.
A great example is the rounding bottom in the US dollar-Korean won cross – USD/KRW.
Welcome back to our latest Under the Hood column, where we'll cover all the action for the week ended April 15, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.
What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names.
There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.
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.
We also weed out hedging activity and ensure there are no offsetting trades that either neutralize or cap the risk on these unusual options trades.
Just to be clear, I'm no expert when it comes to NFTs.
Later this week I'll publish the latest podcast with Justin Paterno, Portfolio Manager of the new NFT fund by OSPREY that I'm an investor in.
But today I wanted to share some of my recent experiences with the new STEPN App and NFT.
I'm earning GST Coin to go running. In fact I've made about $150 worth of this Utility Coin in the past 3 days alone. That's one hundred fifty United States Dollars!
You can see the price of the STEPN coin here since the new issue last month:
