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

As the rally in US Treasuries fizzles, we have to ask ourselves...

Where’s the alpha in the credit market?

It’s an important question, especially for those of us who maintain exposure to bonds. 

And for those of us who don’t, it’s always good to know what’s going on in the fixed income space, as it’s often very valuable information.

Frankly, as investors, it’s irresponsible and negligent to not know what’s going on in this asset class.

It’s the largest market in the world!

And right now we’re seeing evidence of a shift in leadership toward High Yield Bonds $HYG.

We know it’s in our best interest to pay attention to this development so let’s look at a couple charts that suggest bond investors are reaching further out on the risk curve for a higher yield.

First up is high yield bonds relative to their safer alternative, US Treasuries: ...

From the desk of Steve Strazza @sstrazza and Grant Hawkridge @granthawkridge 

Whether more stocks are going up or down these days simply depends on where you look. Some advance-decline lines are moving higher, but others are moving lower.

Weakness and divergences in these indicators are more often than not resolved over time, but the longer they persist the more concerning they become.

This hasn’t been an issue for most of the major averages, as the S&P 500 and other large-cap indexes keep making new highs with confirmation from their A/D lines. 

Yet when we look beneath the surface, and particularly down the cap scale, we're seeing a different story. Ultimately, some stocks are going up, but most are not.

You’ve probably heard already, but the current environment is an absolute mess as the weight of the evidence continues to hang in the balance. In today’s post, we’ll discuss some charts that do a great job illustrating all the mixed signals out there right now. 

Advance-decline lines represent the net amount of stocks within an index that increase in price each day, on a cumulative basis. It’s simple...

Seasonality of markets is something I've done a lot of work on throughout my career. As humans who are part of society, we behave differently depending on the seasons. We dress differently, we hang out with different people, we go to different places, all according to a calendar.

If you think those behavior changes don't impact our decision making, then I don't think you understand humans. And if you think those behaviors and decisions don't affect how we participate in markets, then I think you're just being naïve.

I encourage you to pick up a copy of the annual Stock Traders Almanac published by my pal Jeff Hirsch.

Yesterday after the close, I had a great chat with Ed Clissold, the Chief U.S. Strategist at Ned Davis Research. The podcast episode will be up shortly, so keep an eye out for it. You can subscribe to my Technical Analysis Radio Podcast here, if you haven't...

From the desk of Willie Delwiche.

Key Takeaway: It appears the bulls are preparing to pack it up and call it a day. Dark clouds are starting to roll in, as the slow deterioration beneath the surface has taken its toll. New highs and a relentless rally in the major indexes paint an alternate reality versus the experience of the average stock--a reality that hasn’t quite sparked the interest of the bears so much as it’s exhausted the bulls. Active investment managers continue to taper their exposure, and advisory services have turned their least bullish in more than a year. A storm is brewing in the form of a re-set in sentiment. As it inches closer, the question becomes more of “when” and “how,” not “if.”  

Sentiment Report Chart of the Week: New lows in new highs

Indexes are making new highs, but beneath the surface the case for more caution on the part of investors makes more sense. There are many ways to describe the deterioration that’s been...

This week I had a chance to chat with my old pal Phil Pearlman, who's the Chief Behavioral Officer at Osprey Funds.

Phil and I have been talking markets regularly for over a decade, both behind the scenes and on YouTube.

Never in our wildest dreams did we think we would be here today discussing on-chain analysis of crypto currencies. But here we are!

In today's video we discuss two of my favorite gauges of sentiment, the exchange balances and the dormancy rates. We also touch on the current breadth in crypto markets as the percentage of coins breaking out to new 30 day highs continues to expand.

From the desk of Steven Strazza @Sstrazza

Check out our latest Mystery Chart!

What we do here is take a chart that’s captured our attention, and remove the x and y-axes as well as any other labels that could help identify it.

This chart can be any security, in any asset class, on any timeframe. Sometimes, it’s an absolute price chart. Other times, it’s on a relative basis.

It might be a ratio, a custom index, or maybe the price is inverted. It could be all three!

The point is, when we aren’t able to recognize what’s in front of us, we put aside any biases we may have and scrutinize the price behavior objectively.

While you can try to guess the chart, the point is to make a decision…

So let us know what it is… Buy, Sell, or Do Nothing?

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

The market has been a choppy mess for months. 

Unless you’ve been stuck under a rock or at the beach all summer, this is old news. And we’ve admittedly been a bit obnoxious when it comes to rehashing this theme. But usually when we find ourselves harping on something, it's because it's a big deal.

Our own behavior can be fantastic information, and it's become a part of our process to pay special attention whenever we begin to repeat ourselves a lot.

This week is no different, as the US Dollar Index $DXY provides another example of the market’s sloppy state of affairs.

Just when we thought we might finally have some decisive price action in the Dollar, Friday’s attempted breakout followed by Monday’s weakness is casting some serious doubts.

Was last week’s breakout above the March pivot highs valid?

Or was it just another failed move to add to the market’s growing list of whipsaws and fake-outs?

Let’s take a closer look at the US Dollar Index to...

From the desk of Steve Strazza @sstrazza

Welcome to our latest RPP Report, where we publish return tables for various asset classes and categories, along with commentary on each.

Looking at the past helps put the future into context. In this post, we review the absolute and relative trends at play and preview some of the things we’re watching to profit in the weeks and months ahead.

We consider this our weekly state of the union address as we break down and reiterate both our tactical and structural outlook on various asset classes and discuss the most important themes and developments currently playing out in markets all around the world.

In our last report, we pounded the table on our position that markets are a total mess these days. Another theme we hit on was how many significant risk assets were trading at or below critical levels of overhead supply.

In the time since, we saw bears try to take control of things once again, and as of Friday's close, it looked like they were finally doing so. But that changed fast as a lot of last week's...

Anything gold-related has not had any fun 2021. I can only imagine the disdain gold bugs must be feeling as they watch governments print money around the world, all things crypto soaring, and all the while their precious shiny little rocks doing jack squat.

If you've been long gold, I'm sorry.

But there's good news...

JC and I were chatting yesterday about what appears to be an opportunity in the Gold space.

Maybe, just maybe, gold has found a short-term bottom? We're not going to go out on a limb and declare THE bottom, but recent price action suggests to us that a bounce might be in store. As such, we want to get involved for a quick little hit-and-run play.

One great thing about Technical Analysis is that we don't have to pretend to be experts on every subject. Heck, I'm completely clueless on most things.

I know a lot about Baseball, a decent amount about Wine, and I can tell you the direction a chart is currently heading in. Outside of that, I'm mediocre at best on most topics.

So when we laid out the Cardano trade earlier this month, it was purely based on price. The idea was to go long $ADAUSD if it was above 1.40, which represented around $35-$40B in market cap at the time.

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. What remains is a list of stocks that large financial institutions are putting big money behind… and they’re doing so for one reason only: because they think the stock is about to move in their direction and make them a pretty penny...