JC and I conducted a great options webinar last night, attended by well over 500 people. It was a fun opportunity me to lay out some of the core options strategies I employ on a regular basis to make trades in a variety of trading environments. And the questions we received from the audience showed that they were engaged and enthusiastic, which makes it great for everyone.

Options volumes on US exchanges have been exploding in recent years as investors and traders are waking up to the power and flexibility that trading options provides. And our event last night was a reflection on that.

Anyway, at the conclusion of our call, JC teased a trade out of me I had not yet put on but was considering entering.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

New Mystery Chart!

For those new to this exercise, we take a chart of interest and remove the x/y-axes and any other labels that would help identify it. The chart can be any security in any asset class on any timeframe on an absolute or relative basis. Maybe it’s a custom index or inverted, who knows!

We do all this to put aside the biases we have associated with this specific security/the market and come to a conclusion based solely on price.

You can guess what it is if you must, but the real value comes from sharing what you would do right now. Buy, Sell, or Do Nothing?

Stocks and commodities have been the best place to be in. We've been saying this for a long time now. The other thing we've been saying is that Currency has been a downer in the last few months. Anyone who's been trading in currency would be better off investing in a different asset class!

Does the same view hold true going forward? Let's find out.

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

They say the Bond Market is where the smart money is. Maybe it is. I have no idea.

What I do know is that it's where a lot of the smart information is.

Due to the diversity among credit instruments, there is a swath of unique data that we can use not just for Bond prices and Interest Rates but also to glean insight into other asset classes.

I'm talking about things like TIPS for inflation expectations and Emerging Market or High Yield Bonds to analyze risk-appetite for other assets such as the stock market.

Alpha has been in Equities and risk-assets for a while now. As such, we haven't needed to discuss bonds from a portfolio perspective... but that doesn't mean we aren't paying close attention to these assets.

The Bond Market is overflowing with information. We'd be foolish to neglect it.

In this post, we'll dive into what we mean by this and share some of it with you. We'll also discuss the implications of what we're seeing in the...

This is the video recording of our February 2nd, 2021, Monthly Charts Live Strategy Session.

Here is the video in full:

As an investor you have 2 choices:

1. You can try your hardest to take advantage of the current market environment, either to make money from it, or in many cases, keep as much of it as possible

or

2. You can complain that you don't like the rules, you don't like those who make the rules, you don't like those who enforce the rules, you don't like those who take advantage of the rules, you don't like the broker you chose, or you don't like the "system", which you believed is rigged.

You can do that....

If it makes you happy to complain and complain and complain, go for it. Have a ball. We have that right in this country.

But most of us find the latter to be a huge waste of time. You see, we already came to the conclusion that we don't like some of the rules, or we don't like some of the people who make the rules, or even some of those who enforce them. We certainly don't like some of the people who take advantage of the rules, many of the brokers profiting from it all or the system in general.

It is rigged, in some form or another, on all timeframes.

So what?

Every month we get a fresh batch of Monthly Candlesticks. It only happens 12 times a year.

I promise you guys from the bottom of my heart that there is no other part of my entire process that provides as much value and information as my monthly chart review. Premium Members can access the Chartbook here.

In the meantime, my friend Josh Brown and I have been doing these short monthly videos since last summer. They're fun and I like how he pushes back against me sometimes. In other interviews they make it too easy on me. I like these!

This month we talk about how scared investors are right now. What's more bullish than a bunch of worried investors with stocks all over the world making new all-time highs?

Is this Silver breakout for real? We have well-defined risk parameters to keep us on the right side of the trade.

Where's the next squeeze coming from? We dive in.

And are investors prepared for this new Commodities Supercycle? I don't think they are. Neither does Josh.

...

This is the video recording of our February 1, 2021 Monthly Charts Live Strategy Session

Nifty 50 witnessed a strong move of 4.74% on Monday as the index bounced back from lows to close near the high of the day. Does this change the way we look at the short-term trend in the market?

Read on to know more.

From the desk of Steve Strazza @sstrazza and Louis Sykes @haumicharts

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.

As we discussed in our latest report, bears are running out of any substantial fuel to support their position.

And despite the arrival of some long-awaited selling pressure last week, that absolutely remains the case.

From a more tactical standpoint, though, we're seeing early signs of some volatility moving into what is a seasonally weak post-election month.

In this post, we'll play "devil's advocate" and lay out some of the more bearish developments we could find out there right now. You know... the kinds of things that could start to...

In case you didn't see my Saturday morning note, it seems to have struck a chord with a lot of people.

You see, somewhere along the way, people ignorant to reality just assumed that if we did a better job of educating investors, then it will prevent them from making reckless decisions in the stock market.

It's so adorable to believe that.

I mean, you can tell yourself it's all rainbows and butterflies, if you want to. You have that right.

But it's complete nonsense. The truth of the matter is that it's an ugly world out there. Grow up.

You can try to help these people all you want. It's not going to matter. That's just not how humans work.

I reached out to a colleague who's much better on the science side of this, and here's what he had to say,...

During a quick perusal of ETFs today, I noticed some extremely rich volatility being priced into options on the Retailers ETF $XRT - which isn't entirely surprising given the price action over the past week.

While volatility can certainly continue here, my gut tells me the premiums will fade away soon. Implied volatility is driven by fear and greed, but eventually the marketplace adjusts to the "new normal" and the premiums people will pay for volatility they are now used to will subside. This is where it can be advantageous to put on delta neutral credit spreads.

From the desk of Steve Strazza @Sstrazza

In a further 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 the watchlist.

We've already had some great trades from this universe 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.

And what better time than now to launch a small-cap focused column!? We've seen very strong evidence of a structural rotation down the market cap scale, suggesting a new period of outperformance from small-caps in the...

In light of this week's events, I hope it’s become more clear than ever to you that it is MUCH MORE important for traders & investors to focus on the behavior of markets themselves, instead of the goods and services in which the market deals. 

Technical Analysis represents the former, while "fundamental analysis", we're told, represents the latter. 

I came to this revelation in 2005 when my $MECA completely collapsed because some activist hedge fund manager wasn’t able to accomplish the things he said he would or that we were betting on him doing.

I lost like 70-80% or something like that. Plus, you have to include all the opportunity cost in me not owning the other things, considering it was an epic bull market and I was sitting there buying this p.o.s. $4 horsetrack in Baltimore 

You live and learn right?

Now you know part of the reason why I am the way I am. 

This week we're looking at one long setup and one short setup. The sectors we're focusing on this time are Manufacturing and Media.

As long as the short-term weakness in the market is in place, we will look for selling ideas that fit our risk management and time frame prerequisites.

We retired our "Five Bull Market Barometers" in mid-July 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.

From the desk of Louis Sykes @haumicharts

Call me a young naïve trader drunk on a bull market, but I don't think it's necessary in today's world to blow up in order to learn.

Hear me out.

Back in the '90s and early 2000s, you read a book and experimented with your account through trial and error. But today, we have widespread democratization of financial information that just wasn't around back then.

Given that this new generation of traders have endless routes of online resources and a completely transformed avenue of education, I don't think there's any real need for that.

Those who've been cynical on this trend have been dead wrong.

Retail has been the big winner.

The hedge funds got Tesla wrong. When TSLA didn't meet their standardized Wall Street mold, they didn't give a second look and proceeded to miss one of the best trades of the last few years.

And what about Bitcoin? It was retail that got to the party early on that one, too. For a symbolic change, you had the institutions chasing retail, not the other way around.

From the desk of Steve Strazza @Sstrazza

As our Premium Members already know, we have a laundry list of scans that we run internally on an almost daily basis.

Different market environments, naturally, are more conducive to certain scans and less so to others.

For example, running our "Short Scan" right now is an absolute waste of time (which in itself is information about the current state of the market). On the other hand, our "Minor Leaguers" is perfect for the current environment due to its focus on Small-Cap stocks.

Our "Squeeze Scan" is also absolute gold for the current market. While Gamestop $GME is stealing all the thunder these days, it's not the only stock being propelled higher by short covering. It's happening more or less across the board in the most shorted names.

In fact, if you were to treat these hated stocks as a basket, they'd be outperforming even the strongest industry groups right now.

JC and Howard discussed the topic in this week's Happy Hour video which you can...

I think we can all agree that we learned something this week.

No matter who you are or how long you've been at this, we all learned SOMETHING after this week's events.

Some investors learned about short selling and short squeezes (my wife, for example). Others now have a better understanding of how brokers work and the fact that pretty much all of them sell their order flow. None of this is anything new to us, of course, but it is to a lot of other people.

I personally learned more about some of the Dodd Frank regulations, almost by osmosis. I mean, how could you not? But I realized that I officially care less about all that stuff than I did before. Talk about boring!

Anyway, the funniest part of the whole thing has to be the people screaming for more investor education to prevent this irrational behavior in the future. "We have to protect investors from themselves", "Brokers need to educate their clients"....etc etc