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Making Sense of the FTX Situation

November 8, 2022

From the Desk of Louis Sykes @haumicharts

It's nearly impossible to switch off when you're invested in crypto.

I'm a little jealous of those solely involved with legacy markets; it must be nice to have an off-switch. In this part of the financial world, there's always something happening.

And my passion for the space often makes it difficult for me to let go.

But, last weekend, my hand -- indeed, my whole body -- was forced. A night in the ER and a few days bedridden with a gnarly viral infection overwhelmed my ardor for fake internet coins.

Happy to report I'm recovering. And here's me after I stumbled to my computer to catch up on the action:

It certainly helped get me in touch with all the confused people out there who aren't involved in this ecosystem. Much of crypto's comings and goings can often seem unworldly and completely foreign.

"This must be how normies feel..." I said to myself.

And now we can turn to the substance of this exchange war between Binance and FTX. It's so entertaining...

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Follow the Flow (11-07-2022)

November 8, 2022

From the Desk of Steve Strazza @sstrazza and Alfonso Depablos @Alfcharts

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 Trade Exchange. 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...

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The Minor Leaguers (11-07-2022)

November 8, 2022

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've had some great trades come out of this small-cap-focused column since we launched it back in 2020 and started rotating it with our flagship bottom-up scan, Under the Hood.

For the first year or so, we focused only on Russell 2000 stocks with a market cap between $1 and $2B.

That was fun, but we wanted to branch out a bit and allow some new stocks to find their way onto our list.

We expanded our universe to include some mid-caps.

To make the cut for our Minor Leaguers list, a company must have a market cap between $1 and $4B.

And it doesn't have to be a Russell component — it can be any US-listed equity. With participation expanding around the globe, we want all those ADRs in our universe.

The same price and liquidity filters are applied. Then, as always, we sort by proximity to...

FANG Hits New All-time Highs

November 7, 2022

If you read the subject line and didn't immediately know that this post was about energy stocks, then you probably watch too much television.

FANG has always been a Texas-based Oil & Gas E&P stock.

It has nothing to do with mega-cap growth.

It's quite obvious that many investors bought the wrong FANG.

And I say good. That makes this unwind we've been witnessing that much more explosive.

The more people getting smoked in Tech and other growth, the better it is for the rest of us who aren't stuck in that garbage.

My suggestion is to ignore the gossip columnists and focus some more on the only thing that actually pays anyone: Price

Here's Diamondback Energy $FANG breaking out this week to new all-time highs:

Thankfully it's only price that pays anyone

November 6, 2022

The only way anyone gets paid around here is to sell things at higher prices than where we buy them.

And not necessarily in that order.

Do you have a better way?

I've been doing this for 20 years and I have never seen any other way to profit.

You might enjoy pretending to know "why" a stock or group of stocks may be moving. But the market doesn't pay you to pretend to know why.

The market only pays us when we sell things at higher prices than where we buy them.

And this is all so funny to me, because I constantly see so many people focusing all their attention on everything BUT price.

That never made any sense to me.

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Metals Are Making All the Right Moves

November 4, 2022

From the Desk of Ian Culley @IanCulley

Metals have been one of the weakest areas of the market this year.

It doesn’t matter if we’re talking about the materials sector, commodity space, base and industrial metals, or gold. These assets have carried nothing but downside risk.

But mix in a little dollar weakness, and we see an impressive display of strength. Metals are finally looking like they have something to prove.

Yes, it’s only one day of action. But it’s a day worth noting…

Check out the breakout in copper futures, posting its largest single-day return since 2009:

This is a big development for commodities and risk assets in general.

Copper has found support at its prior cycle peak and is now resolving higher from a three-month consolidation. One of the most-watched leading economic indicators is signaling all is well.

Based on Dr. Copper's bullish breakout, we would expect metal and mining stocks to join the party. ...

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The Hall of Famers (11-04-2022)

November 4, 2022

From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts

Our Hall of Famers list is composed of the 150 largest US-based stocks.

These stocks range from the mega-cap growth behemoths like Apple and Microsoft – with market caps in excess of $2T – to some of the new-age large-cap disruptors such as Moderna, Square, and Snap.

It has all the big names and more.

It doesn’t include ADRs or any stock not domiciled in the US. But don’t worry; we developed a separate universe for that. Click here to check out the International Hall of Famers.

The Hall of Famers is simple.

We take our list of 150 names and then apply our technical filters so the strongest stocks with the most momentum rise to the top.

Let’s dive right in and check out what these big boys are up to.

Here’s this week’s list:

Click table to enlarge view

We filter out any laggards that are down -5% or more relative to the S&P 500 over the...

Rule #6: Don't fight the FED (less valid than #1).

November 4, 2022

The lengths that grown adults will go to justify their reckless behavior continues impress.

One of the classic misnomers that you'll hear out there, especially these days, is: "Don't Fight The Fed"

How many times do you hear these fools say it?

They think they sound smart. They think they're clever.

They pretend to be historians, but all they're proving is that they're lazy, wrong and enjoy embarrassing themselves in front of everyone.

If you're going to quote the great Marty Zweig, the least you can do is quote him correctly.