From the desk of Willie Delwiche.

June asset allocation data from the AAII suggests that investors are beginning to act on their emotions. It’s not uncommon for sentiment to lead and positioning to lag, but the gap between the two had gotten historically wide. That is beginning to change as investors shift from equities to cash. The AAII asset allocation survey shows equity exposure dropping from 67% in May to 65% in June, while cash exposure rose from 19% to 21%. History suggests this could be the beginning of a larger unwind. When sentiment got to similar extremes in 1990, 2003 and 2008, stock exposure approached 40% from above and cash exposure approached 40% from below. By the March 2009 Financial Crisis low, cash exposure was above equity exposure. Even during the brief (though intense) COVID crash, equity exposure dipped to 55% and cash exposure jumped to 26%. If past periods are a guide, investors may only be in the early stages of adjusting equity market exposure.

The title of this post is a takeoff from one of my favorite ongoing SouthPark bits involving our friendly Canadian neighbors :)

There seem to be better bearish setups on my radar than bullish ones. This makes sense as I prefer to trade with trends and the overall stock market trend in 2022 has been down. Ballsier traders than me like to step in and "buy the dip." But I'd rather let the market prove itself to me first.

One of the most beaten-down sectors has been tech stocks. Steve Strazza summed up this sector with one word: "Awful." Yeah.

The stock in my crosshairs today comes from this area.

This is the video recording of our July 1, 2022, All Star Charts Crypto Weekly Strategy Session.

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

Well, well, we're zooming out and looking at the big picture again.

This is that time again where we try to see through the fog of short-term moves and identify the long-term structure of the market. Every month, this process helps have a clear vision going into the new month. So let's dive in and look at some of these charts!

As the sleepy summer season carries on, so do the short Hot Lists.

Director Timothy J. Wilmott revealed an acquisition worth $1.2 million in Darden Restaurants $DRI.

Mario Gabelli’s GAMCO Investors filed a 13D revealing an ownership stake of 22.3% in Telesat Corporation $TSAT.

China is an emerging market right? But is it?

While it's the biggest component of the Emerging Markets Index $EEM, is it something larger, maybe more developed?

It doesn't really have a category.

It's like Notre Dame Football.

From the desk of Ian Culley @IanCulley

No one likes a bear market, except for the bears of course.

They haze the uninitiated, test market veterans, and remind everyone that assets can go to zero.

Not fun for most!

When we take a step back and assess all the data in front of us today, the outlook remains dismal for the overall market.

The New York Stock Exchange and the Nasdaq have posted more new lows than new highs for 31 weeks and counting. Leadership groups carry a defensive tone. Topping patterns continue to resolve lower. Support levels are being ignored and violated. Long story short, it's ugly out here.

And it's not only stocks... Bitcoin just booked its worst month and quarter in over a decade and bonds are having one of their worst years in history.

No wonder investor sentiment is in the dumps. It’s clear we are in the midst of a bear market. 

They’ve replaced the comical “stocks only go up” memes with images of the grim reaper coming for our favorite names. Even memes aren’t as funny in a bear market!

Given...

Look guys, we try to be real with you.

We don't like to sugarcoat what's happening. We don't make up stories. We don't follow journalists and narratives.

What we do is follow the money flow.

This is the video recording of the June 30th Weekly Town Hall w/ Willie Delwiche.

06/30/22 2:00 PM ET

For this week's trade, we're selling an $XLE August 65/85 Short Strangle for an approximately $2.75 credit. This means we’ll be naked short equal amounts of the 65 puts and 85 calls.

Get the full details, risk management procedures and targets for this trade here:

From the desk of Willie Delwiche.

Earlier this week, I laid out some similarities between now and 2008. From a price, liquidity, breadth and sentiment perspective, the echoes are there. 

The comparisons keep popping up. 

A couple of days ago, there was a chart showing that the ongoing decline in equity market value (relative to GDP) exceeds any other drawdown in the past 40 years with the exception of what was experienced during the Financial Crisis. 

Today, it’s data from Gallup showing economic confidence is at levels only seen in 2008-2009. 

I’m not saying that the market and the economy need to follow the course laid out in the wake of the Q4 2007 highs. But the more similarities we see, the more worthy it is of consideration. Put another way, until bulls provide proof that we are not following that path, it would be foolish (and perhaps expensive) to ignore it as a possibility. Don’t...

The next new trade in our Paid-to-Play portfolio is:

It’s another brief Hot List today.

Neil Gagnon, the CEO of Gagnon Advisors LLC, revealed a purchase of approximately 43,200 shares in the small-cap software company SecureWorks Corp $SCWX.

From the desk of Steve Strazza @Sstrazza

When investing in the stock market, we always want to approach it as a market of stocks.

Regardless of the environment, there are always stocks showing leadership and trending higher.

We may have to look harder to identify them depending on current market conditions… but there are always stocks that are going up.

The same can be said for weak stocks. Regardless of the environment, there are always stocks that are going down, too. 

We already have multiple scans focusing on stocks making all-time highs, such as the Hall of Famers, the Minor Leaguers, and the 2 to 100 Club. We filter these universes for stocks that are exhibiting the best momentum and relative strength characteristics. 

Clearly, we spend a lot of time identifying and writing about leading stocks every week, via multiple reports. Now, we're also highlighting lagging stocks on a recurring basis.

Welcome to the Short Report.

We'll...

From the desk of Louis Sykes @haumicharts

One of the greatest features of Bitcoin and cryptocurrencies more broadly are the mechanisms that allow for self-custody.

In traditional assets like commodities and fiat, the only way to maintain self-custody of your assets is to inefficiently store them, which comes with a slew of security risks. Given the challenges of burying gold or stashing cash in a mattress, the overwhelming majority of people simply leave this daunting task to a financial intermediary.

The trouble in crypto, however, is the instability among even the most established of firms and institutions. Hacks, breaches, and insolvencies are incredibly commonplace in the world of digital assets. Even a handful of the largest protocols and lenders have gone under, and billions of funds have been lost in recent months.

And when it comes to exchanges -- one of the safer ways to store funds -- hacks have been common over the past few years.

You don't need to ask crypto native about the dangers of storing their crypto on exchanges. Mt Gox, which handled over 70% of all crypto trading in 2014, shut down after a hack led to the loss of...

From the desk of Willie Delwiche.

Key Takeaway: With pessimism at levels that elicit comparisons to the financial crisis, conditions are set for a meaningful bounce in equities. But at this point, the similarities appear closer to what prevailed in the first half of 2008 than what was seen as stocks moved toward their final lows in March 2009. With the NYSE and NASDAQ still seeing more new lows than new highs (31 weeks and counting) and breadth thrusts conspicuously absent, the backdrop offers little about which to get excited. Recent leaders are experiencing newfound weakness and new leaders are more defensive in nature. Investors have endured a succession of failed rallies in recent months, but that patience may wear thin. The burden of proof is on the bulls. Rally attempts that increase hope but offer little strength would fit the pattern seen during the financial crisis

Sentiment Report Chart of the Week: Mixed Messages From Bonds 

It’s been a rough first half for bonds. For now at least, Treasury...

You can pretend the bond market doesn't matter all you want.

But I'm here to tell you that this $115 Trillion + market that we call "bonds" is what's moving things around here.

It starts with credit.

If there is stress in credit, then you're going to see the implications across markets.

Internally, we were talking yesterday about the energy space and the recent pullback in prices. While still the strongest sector in the market in 2022, this move off the highs has been notable.

Is the trend over? Or was that just the "hot money" taking profits?

I'm not sure we have a definitive answer to that question yet. It looks to me that the market is still sorting that out. And this condition of indecision, coupled with high implied volatility priced into options is combining into a nice opportunity to collect some options premium while energy figures itself out.

So we're going to wade into the energy pool with a delta-neutral short-premium options trade.