From the desk of Steve Strazza @Sstrazza

Our Top 10 Charts Report was just published.

In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.

Tech Weighs Heavy on US Stocks

US equities have outperformed their global counterparts for the better part of the last decade. This is largely attributed to the vast differences between the weighting and composition of US and international markets – mainly, the heavy weighting toward technology in the US and the relative absence of tech outside the US.

The overlay chart of Tech vs. the S&P 500 and the S&P 500 vs. the ACWI All World Index ratios tell the story. Tech dominance in the US strongly correlates with US dominance over global markets. With tech taking the brunt of the recent selling pressure, it calls into question the continued outperformance of US equities. This reiterates the possibility that what has worked for the past decade may not work in the years that lie ahead. Position accordingly…

...

From the desk of Willie Delwiche.

Key Takeaway:

• Optimism fades as risk off reigns.
• Inflation hopes spring eternal.
• Beneath the global trends it’s Pax Britannica.

The hope that emerged from the epic March bounce and the promise of seasonal tailwinds has run into the harsh reality that the breadth backdrop remains challenging and the risk environment has not meaningfully improved. Simply put, this was not the April the bulls were looking for. Optimism has been nipped in the bud (AAII bulls dropped to their lowest level since 1992 last week) and our longer-term risk on /risk off indicator has fallen back toward its March lows. But nothing is actually that straight forward. Looking within our US Risk Off Index, we see three of them are at or near new highs, while two are breaking down to new lows. Even within areas that typically move...

Just to be clear, I'm no expert when it comes to NFTs.

Later this week I'll publish the latest podcast with Justin Paterno, Portfolio Manager of the new NFT fund by OSPREY that I'm an investor in.

But today I wanted to share some of my recent experiences with the new STEPN App and NFT.

I'm earning GST Coin to go running. In fact I've made about $150 worth of this Utility Coin in the past 3 days alone. That's one hundred fifty United States Dollars!

You can see the price of the STEPN coin here since the new issue last month:

Energy names have been working for us. So there's no reason to turn off the spigot just yet. Of course, mindful of our exposure in energy-related sectors already, I want to try to keep any additional risk exposure as limited as possible.

With this in mind, today's play is a bullish bet that we think will take some time to materialize. And we're going to use that assumption to help us lever into a trend at a cheaper cost of participation using a calendar spread.

Author's note

In conjunction with the All Star Charts quarterly playbook, this week's report is a copy of the crypto note we'll be attaching to the playbook.

It covers the themes we're monitoring, a few trades we like taking, and what we anticipate for the asset class moving into the second quarter.

Hope you had a great long weekend.

Cheers guys.

As we move into the second quarter, we leave behind a messy period in the world of cryptocurrencies. Bitcoin ended the first quarter slightly lower while the entire asset class, measured by the total market capitalization, experienced a 9% loss. In this period, the new highs list among the alts has been ominously quiet as participation waned.

There’s been little in the way of market action in this environment. Staying on the sidelines in elevated stablecoin positions has been rewarded, while those who overtraded and bought into breakouts were punished.

I was at a family get together this weekend filled with Easter egg hunts, good wine and some great eats.

It was my wife's side of the family and some of them are familiar with what I do.

"So what are we doing about this upcoming recession, JC?"

"It's quite obvious a recession is coming..."

I responded with a question,

"How much of all that is already priced into the market?"

We’ll lead off today with an update on the big activist story we’re all paying attention to.

After meeting last week to discuss Elon Musk’s takeover offer, Twitter’s $TWTR board announced the adoption of a “poison pill” that makes it economically untenable for Musk to acquire more than 15% of outstanding shares.

It’s also being rumored that Musk is considering taking on partners for his bid for the company.

Today we sit down with my old pal Larry McDonald.

When it comes to the bond market, Larry is the guy I want to talk to. And with Bonds getting off to their worst start to a year, maybe ever, what better time than the present to dive into the fixed income markets?

While I had him, we also discussed the equities markets, commodities, metals and Crypto.

This was a fun one.

I hope you enjoy it as much as I did.

I caught the last 30 minutes-ish of the live Elon Musk interview on TED Talks Thursday morning and I found it riveting. Sadly, I missed most of the discussion regarding his recent splashes with Twitter.

Picking up when I did, there were other things I should’ve been doing (writing this note, for example), but I was immediately hooked. I couldn’t peel myself away from it.

It felt like a real earnest look into the mind of a savant.

Say what you will about Elon Musk the Man, Elon Musk the Innovator, Elon Musk the Political Animal, or Elon Musk the Podcaster and Tweeter. I’m not here to pass any judgments on who he is, what he stands for, or how he accomplishes his aims.

What stood out for me during the chat was the laser focus he has on things he puts his mind to.

When he mentioned that he understands deeply how EVERY piece of his cars are made and assembled, and when he uttered that there is nobody on Planet Earth currently living who knows more about manufacturing then him, I believed him. He wasn’t trying to impress us with this information. He was saying it matter-of-factly.

Yet, as impressive as all his accomplishments (and...

I read a book recently that got into the fact that any and all edges in trading, no matter how robust, degrade over time.

The author listed a variety of reasons, but the biggest one that caught my attention is that if the edge is so good, then the simple act of making a bunch of money exploiting this edge will eventually get discovered. 

This is an incestuous business where people talk. Brokers talk to their clients. Clients talk to their industry contacts. Word gets around about so and so making all kinds of money.  And then copycat traders act and move in to also take advantage of said edge. And this crowding in will work to eventually minimize or trivialize the edge.

Then it’s back to square one. 

It's Saturday Morning Chartoons time. 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.

You can find the whole list of trades here.

Below you'll find the full PDF of this week's charts:

 

 

This is the weekly post that aggregates all the charts we put together throughout the week and organizes them all into one, easy to flip through deck.