I’ve been thinking a lot about if this could be the end…

On the Morning Show today we talked about whether the bull market for stocks could continue if we lost Bitcoin.

The answer is it definitely could. But, wouldn’t it be strange? 

Crypto and stocks have danced together for a long time.

However, I think it’s less about crypto and more about the overall risk appetite of the market. 

Bitcoin is just one part of it. When I think about risk on corners of the market and the kind of things that should be working during a healthy bull cycle I’m thinking of homebuilders, semiconductors, and banks… to name a few groups. 

But I’m also looking into the relationships between groups. In particular, I’m analyzing the performance of offensive stocks versus defensive stocks. The best ratio for this has always been discretionary vs staples.

XLY/XLP ranks second to none when it comes to the assessment of risk appetite.

Cryptocurrencies and crypto stocks are reacting negatively to some of the most positive news they’ve had in years.

It all just speaks to the recent mood shift for Bitcoin and friends. Since the election rally, it hasn’t gone well.

And just think of the news cycle. The first crypto president. A strategic BTC reserve. A non-predatory SEC. Crypto fund approvals. 

The headlines couldn’t be more bullish.

Yet, the average altcoin has suffered a 60% drawdown, and there are literally no cryptos holding up outside of Bitcoin.

I think the next leg for Bitcoin will be lower, as it gets in line with the rest of its asset class. 

In this post, I’ll explain why and what I’m doing about it.

When I think of Bitcoin, I also think of Solana, Ethereum, Coinbase, and Microstrategy… the whole group should work together. It always has. When...

Stocks are under pressure in the US. Today marks the worst performance of the year for the S&P 500.

But, here’s the thing. It shouldn’t come as a surprise. US stocks haven’t been the leaders for a while.

The US major averages have been stuck sideways for about three months while equities around the world have been moving higher.

Outside of India and Taiwan, you won’t find a worse-performing country than America this year. We’re literally at the bottom of the leaderboard.

It’s almost crazy to think at this point… but after 15 years of US outperformance, could the rest of the world be taking the driver's seat?

First, let’s talk about the technical outlook. There is a growing list of individual countries that have already been outperforming the US. But, that’s not what we’re looking to find out. We want to know if it is finally time for ex-US equities, broadly speaking, to assume a leadership role.

They said it was game over for these stocks.

They’ll never see those valuations again.

They are just stories. They don’t have profits.

They can’t survive a rising rate environment.

We’ve heard it all about speculative growth stocks over the past few years.

Cathie Wood and the entire ARK Invest strategy has been lambasted by the media. 

You’ve seen the cover stories. They tried to destroy her. 

But Cathie’s ARK didn’t wreck. It survived the storm. 

And I think it’s bigger than that. I think the most speculative, highest risk, longest duration equities are about to have their time in the sun again. 

Everything I’m seeing suggests we are entering that part of the cycle where the worst stocks become the best stocks. 

It was a busy week for stocks, but the most important price action was elsewhere.

The US Dollar is getting rocked as risk-on currencies catch big bids.

And it’s all happening at a critical level, that if violated, could mark a major shift in the intermarket landscape.

The one big question all investors should be asking themselves right now is simple…

“What is the best trade if this is a failed breakout in the dollar?”

In other words, what goes up the most if the dollar gets slammed back into the box?

Or even, what will be the best trends if the dollar heads back to the lower bounds of its range?

And I have some thoughts on this. I’ve been thinking about it for a long time.

I was expecting the dollar to become a tailwind last year. It didn’t happen. A falling dollar was the one thing missing during the post-election rally. But I think it’s coming now.

When I think about a weak dollar, I think about international equities. The most offensive areas of the global stock market should fare well with a falling dollar. Emerging...

The bid for Chinese equities has been relentless all year long.

Alibaba is up about 50% over the trailing month.

BYD Co is up about 30% in February alone.

Xiaomi Corp is making new all-time highs.

Even the iShares China Large Cap Index has rallied 20% off its January lows.

You get the point. China is red hot. 

With price action like this, you might start to wonder, “where is all the money coming from!?”

And the answer is probably a lot of places. Who knows.

But one area that has definitely become a source of funds for new China bulls… is India. 

This is a ratio chart of Chinese stocks vs Indian stocks, and it is flashing a textbook trend reversal in favor of China.

The relationship had been skewed toward India in a big way up until last year. In fact, Indian stocks have been outperforming China aggressively for almost a decade now. This all began back in 2016, so...

All the Euro STOXX Indexes are at new all-time highs.

The DAX is at new all-time highs.

Germany is about to break out of a massive base in USD terms.

Spain and Greece are completing multi-decade bases.

European equities are on absolute fire right now and participation is broad.

Meanwhile, they are still talking about the recession in the Eurozone.

It’s a perfect setup. In fact, the bull thesis here is a lot like China in a sense that many of these countries check all three boxes… sentiment, technicals, and valuation.

Some of these European countries like Poland and Austria are even cheaper than China with CAPE ratios around 10x. 

They also come with plenty of beta. For example, the MSCI Poland ETF EPOL is already up about 150% off its 2022 cycle low.

This kind of action says a lot about risk appetite, too. This is true for some areas of Europe more than others.

This stock is really special to me.

It’s the first one I ever bought. 

I used to watch Jim Cramer with my father when I was in high school. He knew I had an interest in the market so gave me a bit of money to experiment with.

I took one of Jim’s calls and bought Build Your Dreams. Part of his bullish thesis was that Buffett was in. This was almost 20-years ago. I paid the $50 international fee and got long.

They call it BYD Co. now. But, it’s the Tesla of China. These guys have been making EVs and batteries longer than anyone. They are an industry leader, and no one ever talks about them.

Mobility is a monster trend and it is just picking up steam.

China is also a monster trend right now. I think it’s the fattest pitch in the market. It’s the kind of trade setup we wait years for. 

And BYDDF is one of the secular leaders in the region.

Much unlike Alibaba, Tencent, and Baidu – the other mega-tech bellwethers – BYD Co is breaking out to new all-time highs.

The bottom line is it is one of the best-looking charts in...

We bought some calls in EHang $EH yesterday.

They build autonomous flying cars in China. Some real-life Jetsons stuff.

We also bought some calls in PDD Holdings $PDD.

They are one of the Chinese online retail conglomerates, known in the US for temu.com.

Today, I sold half of both of my positions at double the price I paid yesterday.

Now, this does not mean I think these stocks will go lower from here. I think they’re going higher.

It’s just my rule. I follow it religiously. 

It keeps me in the game. It’s how I keep swinging.

When I sell a double I am effectively earning a risk-free shot at making big profits. No matter what happens, I can’t lose.

But, it’s bigger than that. It’s not about the half position left on the table.

It’s about getting liquid and doing it quickly.

It’s about getting my money back. 

In bull markets I don’t just have cash laying around. I’m invested. 

And in times like these, there are so many opportunities....

Every now and then I come across a chart that I feel the need to send over to our friends at the CMT association.

The curriculum covers all sorts of pattern recognition and analysis. While things don’t always work out the way the textbook teaches… sometimes, they do. And it’s just so lovely to see. 

It’s happening now with the recent action in Bank OZK. Both of these flag pattern breakouts are picture perfect.

Let’s use this chart as an example to discuss the classic continuation pattern.

Price was coiling in a bear flag coming into the year. 

The only difference between the first flag and the second flag is the trend that preceded them. When the trend that leads into the coil is down, it is a bear flag. When it is up, like it is now, it is a bull flag.

Another difference between the two formations is the way that they resolved. The bear flag resolution is actually considered a failed pattern as it resolved in the opposite direction of the downtrend that preceded it.

Failed patterns are some of the best patterns though. As...

The monthly strategy session has always been one of my favorite things we do here at All Star Charts. I’ve been watching these calls for like ten years now. Since long before I worked here.

They are a huge part of my process. 

So, when I got the call from JC on Monday, I was pumped. It’s always an honor.

Not to mention, there’s so much to talk about right now… from some major intermarket developments to the expansion in participation for global equities and commodities. We covered it all. 

If you missed the call, you can rewatch it here.

If you are not a member of ASC premium, you can sign up here and get access.

And for the rest of you, here’s one of my favorite charts from the slide deck:

This is a custom equal-weighted index of some of the absolute worst...

It’s been a wild ride for crypto these past few months.

The post-election rally was one for the record books.

But the same is true for the steep and swift drawdowns that have ensued.

The majority of these altcoins are down more than 50% from their December highs. The average cryptocurrency has been decimated. 

It is common for volatility to spike in both directions at inflection points… and I think the entire crypto market is at one now.

The question is what direction are we going in?

When I think of charts like Binance, Ethereum, or Solana… they’ve been rangebound for a long time. These primary trends are sideways.

Here they are shown trading right around the same levels they were at in Q1 of last year:

So it could really go either way. I don’t have a strong opinion on whether they resolve higher or lower from here. But when I see a resolution, I’m going to go with it. 

I’ll be adding on breakouts and I’ll be out if these ranges break down. In fact, I already ...