From the Desk of Kimmy Sokoloff

It was a decent morning for us, a few decent trades to send us off into the holiday!!

The market is trying to breakout, and hopefully we get follow-through on Friday.

This is the video recording of our November 23, 2022, Inside Scoop Weekly Strategy Session.

From the desk of Willie Delwiche.

The S&P 500 just experienced its longest stretch without a 1% daily swing since Thanksgiving week 2021. But moving from volatility to calm is just part of the needed rotation. It will be difficult for bulls to stay optimistic if the market is not able to rotate from weakness to strength.   

Why It Matters: Some of the most challenging years for the stock market in the past half century have had a combination of weakness and volatility similar to what has been experienced in 2022. The best gains have tended to come in years when the market has been calm and strength has been persistent. 2017 is a prime example of this. The recent ebbing in volatility provides some hope that conditions are improving and that the experience of the first three quarters of 2022 is receding into the past. The odds of a better market environment are greater on a shift from weakness to strength than from volatility to calm.  

In this week’s Sentiment Report we take a closer look at the rise in...

After we got past sharing each others' Thanksgiving dinner menus, wine pairings, and recipe swaps, the All Star Charts gang got back to business this morning hunting for trade ideas.

We arrived at today's idea in a roundabout way:

"Discretionary stocks have been the 'least shitty' performers as of late."

"We're seeing relative strength in 'da homies. [Homebuilders]"

"In that sector, Lennar $LEN is showing the best relative strength relative to the others."

...and that is a taste of how the Thanksgiving sausage is made.

So let's dig into some visuals to highlight what we're seeing.

We've adjusted a position in the Paid-to-Play portfolio today:

Following the collapse of Alameda and FTX, crypto's correlations to legacy markets have completely come off.

As an asset class, this is the most independent crypto has traded for over a year. For most asset allocators and traders, this is generally favorable because it increases the number of uncorrelated assets to profit from.

A big problem for crypto traders is they've been merely riding on a short volatility vehicle that's been tightly correlated to long-duration growth stocks.

All crypto has offered in this period is Beta rather than a unique directional market.

So it's certainly been nice to see some dislocation from equity markets -- even if crypto's been lagging hard following the FTX fiasco.

But my bet is this correlation between stocks and crypto will more than likely return in the coming weeks and prove a durable feature of the landscape.

You might not like it, but we must always deal with reality whenever money's on the table.

The most significant insider transaction on today’s list is a $2.5 million purchase by Element Solutions $ESI Director Martin E. Franklin.

The CEO of Nerdy $NRDY also filed a Form 4 disclosing a purchase of $564,439.

From the Desk of Kimmy Sokoloff

First and foremost, a very Happy Thanksgiving to all.

The bull flag pattern I've spoken about is in the process of breaking out. If this continues, this market can head toward $SPX 4,020.

From the Desk of Ian Culley @IanCulley

It’s time to short the USD. 

Based on the weight of the evidence, our bias for the US dollar has flipped bearish. 

Our first shot at betting on a weaker dollar was successful, as the EUR/USD hit its target earlier in the month. That’s encouraging!

But it’s important to note most dollar pairs are running into logical levels of support or resistance.

Many of these charts are messy at best.

Except the Mexican peso.

In fact, no currency has stood its ground during the dollar's parabolic advance like MXN.

From the Desk of Kimmy Sokoloff

The market chopped around the fist half of the day and rallied into the close.

It's still coiling for a bigger move, I'd like to think.

From the desk of Willie Delwiche.

The yield curve is getting a lot of attention right now, and deservedly so. An inversion in the spread between the 10-year and 3-month Treasury yields has an unblemished record in anticipating recessions. But beyond that suite of indicators, there is actually evidence that macro conditions have stopped deteriorating.      

Why It Matters: Despite a recent lull in day-to-day price swings, 2022 has been one of the most volatile and weakest years for stocks in the past half century. Whether those trends persist into year-end or strong post-midterm election seasonal tendencies have investors feeling less bruised and battered by year-end likely depends on macro conditions. This is not a question of whether conditions are good or bad, but whether they are getting better or worse. Since last month our Macro Health Status report has actually improved. More favorable corporate bond yield momentum and stability in the earnings momentum trend have helped offset the yield...

We had a resting GTC order filled in the Paid-to-Play portfolio today:

We've adjusted a position in the Paid-to-Play portfolio today:

Back in June, we published a report assessing the asymmetric opportunity to dollar-cost average into Bitcoin.

We concluded that mass liquidations driving Bitcoin back to levels last seen in 2017 represented a favorable opportunity for crypto investors to begin scaling into long-term spot positions.

In the almost exactly five months since then, Bitcoin has continued to creep lower, nearing 15,000. This price action validates the DCA strategy, and it looks even more favorable for long-term crypto investors.

Let's revisit the underpinnings of the strategy in light of recent history.

This doesn't have to be complicated.

Is the list of stocks and sectors in uptrends getting longer or is it getting shorter?

Are we seeing more stocks breaking down to new lows, or fewer?

If you can count, then you know the answer.

The question is, are you even willing to count?

The largest insider transaction on today’s list is a $17.9 million purchase by Patrick G. Ryan, the CEO of Ryan Specialty Group Holdings $RYAN.

Ryan is a titan of the insurance industry, as he formerly founded and served as chairman and CEO of Aon Insurance $AON for over 40 years.

From the Desk of Kimmy Sokoloff

To me, this market is coiling for the next big move.

As I've mentioned, if we continue to hold $SPX 3,934, there's potential up to SPX 4,020. Until then, this market is very choppy.

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.

This week we're looking at the outperforming PSU Bank stock.