One of the most underappreciated elements about Bitcoin is the transparency of transactions. This enables us to gain deep insights into the behavior of investors and users of the network.

The growing industry of on-chain analysis looks to address the concerns of those who wish to categorize, cluster, and ultimately analyze entity behavior to find increasingly reliable and actionable signals.

Blockchain mechanisms mean analysts and traders have access to a wide array of data that isn't possible to replicate in traditional asset classes, like stocks, commodities, and bonds.

One of the key metrics we've found to be of tremendous value is quantifying investor supply and demand through the use of supply shock.

In today's note, we'll outline how we use this data to supplement our traditional price work and technical analysis.

We're continuing the theme of monitoring relative strength in this tricky tape. The next leaders if/when a bull market resumes are revealing themselves now. Are you paying attention?

One of the names that is holding up relatively well recently, and one that also appears in our recent Follow the Flow report is Qualcomm $QCOM.

This week when the broader indexes printed their recent lows, $QCOM tested the low of a the range coming out of its breakaway gap last November and held. This is important.

To some investors, they might look at the market and say, "Hey on Monday the market was up a little, and today is was down a little. NBD".

And they won't be wrong.

In fact, Charlie Dow always preached that closing prices were the most important prices. And that was 130+ years ago.

But for those of us who understand the current circumstances. For those of us who do watch the market internals and intraday action, we wouldn't come to that sort of simple conclusion that easily.

In fact, we'd probably disagree with the, Up a little Monday and Down a little Tuesday idea.

There's much more to it than that.

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

Risk assets are on the ropes after taking a series of heavy hits last week.

Equities have been a sea of red across the board as selling pressure broadens out. Growth continues to collapse, and even many of the latest leadership groups –  like banks – are failing to hold their breakouts.

When we look inside the stock market, there's certainly a bear market feel to the price action in recent weeks. For example, offensive areas are being sold indiscriminately while defensive sectors make new relative highs. 

But when we look outside the stock market, the story is very different. Despite the volatility, we’re still not seeing much of a bid in traditional safe-haven assets.

In today’s post, we’ll focus on the Japanese yen. But it’s the same story for gold and Treasuries.

Here is a look at all three. From top to bottom, this is the Gold ETF $GLD, the US Treasuries ETF $IEF, and the Japanese yen $JPY:

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From the desk of Willie Delwiche.

Key Takeaways:

• Corporate bond yield momentum a headwind for stocks 
• Growth and inflation leave little excess liquidity for financial markets
• Fed poised to follow global central banks into tightening mode

Plenty of eyes are on the Fed this week. The decisions it makes this year with respect to tapering its asset purchases, beginning a rate hiking cycle, and the timing of its balance sheet wind down will reverberate through the financial markets. This week’s meeting is more about posture and communication than it is about action - even with that I would not be surprised by hawkish dissents from members of the committee who want to accelerate the time table for any or all of the decisions mentioned above. Before getting to possible equity market implications of interest rate hikes, we would do well to acknowledge that liquidity conditions have already begun to deteriorate. 

The long-term trend in the 10-year T-Note yield turned higher a year ago and the yield recently got to its...

I joined JC and Strazza today during their daily Twitter Spaces brainstorm and we got to kicking around ideas of how we want to play this market.

When prompted, I voiced my opinion that anything we do in the options space right here should involve being sellers of options. Premiums are elevated pretty much across the board. So whatever we do, let's get a tailwind to help us along. And for me right now, that tailwind is mean-reversion in options premiums.

We never know when premiums will trend back to normal, but we do know that they always eventually do. So we must position ourselves accordingly.

After kicking around a few ideas, collectively we agreed it's best to err in a household name that is unlikely to kill us if we get it wrong.

As we progress into Q4 of Fiscal Year 2021-2022, this playbook outlines our thoughts on every asset class and our plan to profit.

This playbook will cover our macro view, touching on Equities, Commodities, Currencies, and Rates, as well as outline our views on the major nifty indices and the sector/thematic indices.

We also cover individual stocks we want to be buying to take advantage of the themes discussed in the playbook.

In yesterday's note, we outlined how we're approaching the market in the aftermath of this volatility.

Bitcoin remains stuck between strong support in the low 30,000s and resistance around 42,000.

Unless we're buying dips to the lower end of the range or a break above this resistance zone, there's not a whole lot to do in terms of trading either Bitcoin itself or most of the individual alts.

This message most certainly remains relevant despite yesterday's recovery.

But in evaluating the names leading this recent bounce, relative strength has been concentrated in names we've been pointing to in recent weeks.

Names like Cosmos $ATOM, Terra $LUNA, and Fantom $FTM all held up reasonably well in relative terms and have also been leading this recent recovery bounce.

These are three of the best-looking names in the entire asset class from a relative strength perspective.

We anticipate that if the market continues this bounce, these three names will lead the recovery higher.

...

This week we’re looking at a long setup in the sugar stock, which remained resilient in market drawdown.

Let's take a look at the trade for this week!

From the desk of Steve Strazza @Sstrazza.

Welcome to our latest Under the Hood column, where we'll cover all the action for the week ended January 21, 2022. This report is published bi-weekly and rotated with our Minor Leaguers column.

What we do here is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.

We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: a list of stocks that are seeing an unusual increase in investor interest.

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From the desk of Willie Delwiche.

Key Takeaways:

• First 10% correction in two years signals the end of an extended period of relative calm for stocks.
• US breadth is slipping while global breadth is more resilient.
• Recent stock market volatility is unlikely to knock the Fed off course.

Breadth deterioration was not just a story for the second half of 2021, it has persisted, with twist, into 2022. The persistence: more and more stocks on both the NYSE and NASDAQ have been making new lows while fewer and fewer industry groups in the S&P 1500 have remained in up-trends. The twist is that while breadth trends in the US are deteriorating, global breadth has been more resilient. Nearly half of the stocks in the MSCI Europe index are trading above their 50-day averages while for the S&P 1500 it is less...

From the desk of Steve Strazza @sstrazza

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 TradeXchange. 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...