Do you see something else here?

Massive tops? Check.

Lower lows? Check.

Lower Highs? Check.

On the this episode of Bearish or Bullish we talk about the Crypto Crash and how when Futures opened up on Sunday, they didn't care. Stocks were actually up a little. That's the market signaling to us that there is no systemic risk right now in Crypto. And we're not even close.

That's probably a good thing, and more bullish for the Crypto space considering how much larger it would need to get to really become intertwined with Stocks and Bonds, which combined are over $150T in market cap. Crypto is only 1.6T, just to put things in perspective.

We also discuss the latest Minor Leaguers Report which scouts the farm system for Small-cap stocks between $1-2B in market cap before they get called up to the Mid-caps ($2B+)

Relative strength in Bonds and European Banks. But is that sustainable? What should we expect?

All this and why Chardonnay is the world's most versatile grape on the latest Episode of Bearish Or Bullish.

Enjoy!

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 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 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

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 we...

They say that you shouldn't kick someone when they're down. But in the markets, that's actually the best time to kick them, when they're already down.

We call that "Relative Weakness". When we're shorting stocks, those are the ones we're looking for.

In the case of Small-caps, they've been a heads up of a problem in the stock market since almost 3 months ago. They suggested stocks would struggle and would go sideways, at best.

And that's exactly what we've seen. Many stocks and sectors going sideways, and a bunch of them going down.

BUT, if we're going to go from Bad to Worse, then Small-caps are most likely the ones getting hit the hardest. 

You can see in these breadth numbers that the internals in Small-caps have not been improving, they've actually been getting worse.

From the desk of Willie Delwiche.

Key takeaway: Sentiment continues to shift from optimism to pessimism. Unlike the March optimism unwind, the current situation is associated with a waning risk appetite on the part of investors and a more challenging liquidity environment. This argues for patience from a tactical perspective and warns against a premature conclusion that the speculative excesses have been removed from the system. While the pullbacks in some of the speculative areas may seem substantial, they still pale in comparison to the run-ups that were seen in late 2020 and early 2021. In such an environment, less may be more. Surviving such unwinds is not only about preserving capital, but also maintaining mental health.

Sentiment Report Chart of the Week: Risk Appetite Wanes

High-yield corporate bonds are beginning to roll over relative to their safer alternative. This indication of cooling risk appetite is one of the key differences between the sentiment reset last March...

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

We’ve recently pointed out the possible double tops in the Dollar index and the USD/CAD, along with our overall outlook for further weakness from king dollar.

But can we find other areas of the market that could provide further insight into the US Dollar’s direction?

After all, many market participants are fixated on the direction of the US Dollar right now as it approaches its key mutlti-year lows.

Why does the Dollar matter so much to investors?

Firs of all, USD and risk assets have had a very strong negative correlation over the last several years. The USD Index bottomed in early 2018 as stock markets around the world peaked. Conversely, the dollar topped during the Covid sell-off when stocks bottomed out at their March 2020 lows.

To gain a clearer picture of the USD, we need to go beyond the Dollar Index and developed currencies.

Let’s look at a couple of charts of emerging currencies as they provide valuable information on broad USD performance, as well as...

This is the video recording of the May 2021 Conference Call.

From the desk of Steve Strazza @Sstrazza

Welcome to our latest Minor Leaguers report.

We've already had some great trades come out of this Small-Cap focused column since we launched it late last year and began rotating it with our flagship bottoms-up scan, "Under The Hood."

To make the cut for our Minor Leagues list, a company must have a market cap between $1 and $2B. After applying price and liquidity filters, we simply sort by proximity to new highs in order to focus on the best players.

The goal is to catch the strongest names while they're small and still have serious upside potential. If any of these stocks ever climb the ranks to the big leagues, the returns could be huge. We're looking at 5-10x moves just to break into large-cap land!

And what better time than now to launch a small-cap-focused column? We've seen robust...

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

Gold has been one of the last places we have wanted to put our money over the past eight months, second only to Bonds.

Other areas of the commodities space, like Base Metals, Energy, and Ags, along with risk assets in general have experienced an explosive rally. While Precious Metals have gone nowhere. But are we starting to see signs that this could be changing?

Last week we pointed out that Lumber had reached our target and could be due for a pullback. And we’re seeing that play out.

The previous week we noted that other procyclical commodities within the Base Metals group were also reaching our targets and testing areas of potential resistance. And like Lumber and so many other risk-assets, they remain trapped below key levels of overhead supply.

So while much of these former leaders appear to...

It's always nice to sit down and talk about what the future is going to look like.

Currently, the largest hotel chain in the world doesn't own any hotels (Airbnb). The largest taxi cab company in the world doesn't own any taxi cabs (Uber).

Will the largest bank in the world not own any banks? Howard Lindzon says yes, "Banks aren't dead, they're walking dead".

This was fun. I learned a lot.

It gives me more reason to keep an eye on opportunities in the Crypto Markets.

I'm a chart guy, as you're all well aware. Price drives all of my decision making. But if you're interested in what's happening behind the scenes (I am), then this one is for you!

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 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?