One of my favorite things to talk about is Behavioral Finance and Investor Psychology. The whole thing is incredibly fascinating to me. That's why I was super stoked when Dr. Daniel Crosby invited me on his Standard Deviations Podcast.

Usually I'm the one asking him the questions, but this time he flipped the script. This was a lot of fun!

One thing they don't teach you in the books is the old Technical pattern, "The Hot Mess".

You know when you look at a chart just churning sideways....

Probably trading near flat moving averages....

Below overhead supply....

There's no real edge in either direction....

Traders are getting chopped up in what feels like quicksand....

That, my friends, is a Hot Mess.

From the desk of Steve Strazza @Sstrazza

In our continued effort to identify individual equities that fit within our larger Macro thesis, we recently rolled out our latest bottoms-up scan: "The Minor Leaguers."

We write a post every other week where we outline some of our favorite setups from this universe of stocks.

We've already had some great trades come out of this column and couldn't be happier about the early feedback.

Moving forward, we'll be rotating this column with "Under The Hood" each week.

In order to make it onto our Minor League list, you must have a market cap between $1 and $2B. There are also price and liquidity filters.

Then, we simply sort the stocks by their percentage from new highs. Easy done.

The idea is to catch the strongest names while they're still small and have serious upside potential. If any of these stocks ever climb up the ranks...

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

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 of 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 it 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?

We're looking for trends.

That's why Technical Analysis works. Because stock market returns are not normally distributed. We have the data. It's not a secret.

Stocks trend. They go up for a while, they go down for a while and sometimes they can go sideways for a while.

Interest rates, commodities and currencies all act the same way. That's just how markets behave.

You can choose to pretend that it's not that way.

But we have the math that proves that it is.

So that's why we do this. That's why we rip through thousands of charts every week to identify which ways things are going.

All things.

Here's one of the biggest charts that continues to point to any choppy environment just being part of a bigger uptrend for stocks and risk assets:

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

Similar to last week, many areas of the Commodity space continue to chop sideways below overhead supply.

Healthy digestion of recent gains makes total sense given the explosive moves since last summer and in many cases is much needed.

Given that sideways price action is the main theme across Commodities at the moment, one particular consolidation stood out this past week.

And that consolidation is in the Corn market.

Corn futures have ripped off of their March-2020 lows, taking out key multi-year highs along the way.

Earlier this year it broke above a key Fibonacci level and its 2014 highs, and is now taking a breather in the form of a potential 8-week Flag or Pennant formation. These types of consolidations often resolve in the direction of the underlying...

From the desk of Steve Strazza @Sstrazza

Welcome to the 2 to 100 Club.

Something we’ve been working on internally this year is using various bottoms-up tools and scans to complement our top-down approach. One way we’re doing this is by identifying stocks as they climb the market-cap ladder from small, to mid, to large, and ultimately to mega-cap status (over $200B).

Once they graduate from small-cap to mid-cap status (over $2B) they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.

But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market as that is typically where these potential 50-baggers come from.

Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to a myriad of others… all would have been on this list at some point during their journey to becoming the market behemoths they are today.

When you look at the stocks in our table you will notice...

There are times to make money in the market and then there are times to keep your money.

In sports you play offense and you play defense.

Offense sells tickets, but defense wins championships.

That's how I learned it.

This is what corrections look like.

When Consumer Staples bottomed out on March 1st relative to the rest of the market, that was one of the first signs of defensive rotation.

At the time, we chalked it up as just one signal, of many that we monitor.

But as the month has progressed, the soldiers continue to fall.

Aussie/Yen has rolled over and we're even getting a bid in US Treasury Bonds:

We've seen quite a move lower in $TLT (which moves inversely to interest rates) since this summer.

Is the bottom in?

My crystal balls says: "Don't ask me stupid questions." So, that's no help.

But here's what I know:

• Implied volatility priced into $TLT options is relatively high, though declining from recent high levels.
• We have a clearly defined level (of perhaps temporary) support at $133.
• High volatility gives us the ability to short options and gives us plenty of room to be wrong and still make money.

The bet I'm making is $TLT is going to chop around in a bit of a range over the next 2-6 weeks and this will cause volatility to contract.

So here's how I'm going to play it:

From the desk of Steve Strazza @sstrazza

At the beginning of each week, we publish performance tables for a variety of different 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 continue to reiterate the same themes and pillars that support our bullish macro thesis. This would include an abundance of evidence pointing to risk appetite, rising developed market yields, strength from commodities, and of course the ongoing rotation toward cyclicals, value, and international stocks, among others...

Just about anywhere we look, we're seeing investors gravitate further and further out on the risk spectrum.

At the same time, some of the former market leaders have retreated since February and are currently hovering near key levels. Similarly, even the markets' more recent leaders have shown signs of weakness the past few weeks as some have violated critical tactical levels while others are consolidating at logical levels...

Bear Markets are environments where a majority of stocks are falling in price for a prolonged period of time.

Sometimes you'll hear lies about a 20% decline defining such things, but that's just bullshit.

The number 20 is a completely arbitrary number that has absolutely no meaning. Thinking it does is foolish. Why 20? Why not 19.5? or 20.2?

There is no reason. They're just lies.

If you ever hear anyone say that, "A bear market is when it falls 20%", you know it's because they're in the entertainment business, not in the truth business.

Stay away from those kinds of people. They're not here to help.

It's their job to distract, it's our job to ignore.

In reality, expansions in the new low lists are things you’ll find near the beginning of market declines. You’ll see spikes in these lists that haven’t been seen in years.

Here's what this looks like coming into the week. It's still a ghost town: