One of the most underappreciated elements about Bitcoin is the transparency of transactions. This enables us to gain deep insights into the behavior of investors and users of the network.

The growing industry of on-chain analysis looks to address the concerns of those who wish to categorize, cluster, and ultimately analyze entity behavior to find increasingly reliable and actionable signals.

Blockchain mechanisms mean analysts and traders have access to a wide array of data that isn't possible to replicate in traditional asset classes, like stocks, commodities, and bonds.

One of the key metrics we've found to be of tremendous value is quantifying investor supply and demand through the use of supply shock.

In today's note, we'll outline how we use this data to supplement our traditional price work and technical analysis.

We're continuing the theme of monitoring relative strength in this tricky tape. The next leaders if/when a bull market resumes are revealing themselves now. Are you paying attention?

One of the names that is holding up relatively well recently, and one that also appears in our recent Follow the Flow report is Qualcomm $QCOM.

This week when the broader indexes printed their recent lows, $QCOM tested the low of a the range coming out of its breakaway gap last November and held. This is important.

To some investors, they might look at the market and say, "Hey on Monday the market was up a little, and today is was down a little. NBD".

And they won't be wrong.

In fact, Charlie Dow always preached that closing prices were the most important prices. And that was 130+ years ago.

But for those of us who understand the current circumstances. For those of us who do watch the market internals and intraday action, we wouldn't come to that sort of simple conclusion that easily.

In fact, we'd probably disagree with the, Up a little Monday and Down a little Tuesday idea.

There's much more to it than that.

From the desk of Steven Strazza @Sstrazza and Ian Culley @IanCulley

Risk assets are on the ropes after taking a series of heavy hits last week.

Equities have been a sea of red across the board as selling pressure broadens out. Growth continues to collapse, and even many of the latest leadership groups –  like banks – are failing to hold their breakouts.

When we look inside the stock market, there's certainly a bear market feel to the price action in recent weeks. For example, offensive areas are being sold indiscriminately while defensive sectors make new relative highs. 

But when we look outside the stock market, the story is very different. Despite the volatility, we’re still not seeing much of a bid in traditional safe-haven assets.

In today’s post, we’ll focus on the Japanese yen. But it’s the same story for gold and Treasuries.

Here is a look at all three. From top to bottom, this is the Gold ETF $GLD, the US Treasuries ETF $IEF, and the Japanese yen $JPY:

From the desk of Steve Strazza @Sstrazza.

Welcome to our latest Under the Hood column, where we'll cover all the action for the week ended January 21, 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.

From the desk of Steve Strazza @sstrazza

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.

There you go.

I wrote that headline to save you the trouble of turning on your TV or following your favorite fear mongerer online. You're welcome.

Unless you've been lost in the wilderness for the last two weeks (not a bad place to have been, btw), then you no doubt know the bulls are currently in trouble.

The fake-out breakout in the Russell 2000 $IWM has turned into a full-blown route, the S&P 500 is testing levels last seen at the end of September and early October, and $VIX has printed the highest levels of the year. There's not a lot to be optimistic about right now -- especially if you're holding a bunch of long positions that are at or near stop-out levels like I am.

I got stopped out of a bunch of positions last week, two today (a long call spread in $STX and a short strangle in $XLK), and a couple more might get exited tomorrow if things don't stabilize here.

Into this maelstrom, we've been dialing back putting on new positions. During last week's holiday-shortened trading week, we only put one new position on -- and that may have been one too many ;)

Every bear market has a culprit.

There's always that one sector or group of stocks that drags the rest of them down.

In 2007, for example, it was Financials and Homebuilders. In 2000, of course, it was Tech and Growth.

This time around, it's been Small-cap Growth, and overall underperformance from Growth in general.

But these 4 are the ones we've been pointing to as good representations of this cycle's culprit, or potential culprit anyway. You never actually know until afterwards.

Since stocks peaked last February, the evidence has been pretty clear that these are the ones that paint the best picture of what's been going on over the past year:

This is probably as good of a time as ever to get back to basics.

Let's try to remember what this is all about.

What the hell are we doing here anyway?

I won't speak on your behalf, but I'll tell you the way I look at it.

The reason Technical Analysis works is because we're identifying trends.

And Prices trend.

I get to talk to traders and investors of all shapes and sizes every day of my life. This is something I like to do for fun, and it's also a great way to learn. But remember, I do this for a living. So not a day goes by where I'm not talking to market participants.

This has gone on for decades now. Everyone from the largest banks and hedge funds on the planet to recent grads first learning how to trade.

I have a lot of conversations with these investors. And one common theme I've heard over the past few months is just how difficult of an environment this currently is.

A lot of traders are getting chopped up in this mess of a market. And it's not anything new, it's been messy for quite some time.

So you're not alone in this.

Please don't think you are.

Bonds & Commodities. That's what the stock market bulls still have left.

But why do Futures matter to stock traders and investors?

Because the bond market and commodities market combined are waaaaay bigger than the stock market.

It starts with the information we're getting from futures markets, and then it trickles down to everything else from there.

With the stock market losing key support in the Nasdaq, S&P500, Small-caps, Transports and Bitcoin, what's left?

I think these 2 are what the bulls have left....

From the desk of Steven Strazza @Sstrazza and Ian Culley @Ianculley

The bull market for commodities is alive and well. They were the top-performing asset class last year, and they’re kicking off the new year with a lead once again. 

The energy-heavy CRB Index is printing new seven-year highs, and our ASC Equal-Weight Commodity Index just resolved from a nine-month base to its highest level since 2013.

To take advantage of this area of leadership, we’ve been highlighting strength and outlining long ideas in a variety of commodity markets.

We know not everyone has access to the futures markets, and that’s OK, because there are plenty of opportunities to express a bullish thesis on commodities through the equity market.

To make this easier, we’ve put together a universe of stocks that offer investors exposure to a wide array of different commodities.

Let’s dive in and talk about some of them.

Here’s our Natural Resource Stocks table: