Hello TheoTrader, The global equity realignment is still ongoing, as the market’s internals here in the U.S. tell us defensiveness is the proper position. But in reality, the selling has been pretty orderly thus far. The meaning behind this runs deep. For years, U.S.-based traders have been spoiled – all the exciting action was taking place here, after all. I’ve been talking a lot about China recently, and I still think the best opportunity for this year, going forward, is across the Pacific. But as I’m about to show you domestically, the U.S. market still has problems. It’s trying to heal, but I still need to see more.  Here’s what I mean… Healthcare Is Big… But There’s a Catch The healthcare sector, which was one of the worst-performers of 2024, has emerged as the shining star to start the year. Unfortunately, this is a better sign for bears than it

It’s been a while since we’ve uttered the words quantitative easing, and for good reason. Markets have been operating smoothly without the Fed’s infamous program, and even amidst the selling we’ve seen lately, it’s been fairly orderly. But has this orderly market carried over into cryptocurrencies? Hardly. Many cryptos staged impressive rallies after Sunday’s initial announcement from President Trump about the reserve fund, only for them to reverse all their gains the next day. So, could today’s Crypto Summit mark the start of a new era for this sector that’s becoming more mainstream by the day? Let’s discuss… Confidence Makes Markets I want to be very clear about something – I treat crypto like any other asset class or sector. Yes, the blockchain technology is special, and isn’t going anywhere, but where the majority of these coins end up is anyone’s guess. Over the past few weeks, I’ve been covering

For a while there, it appeared as though all the negative market sentiment was unfounded, but then last Friday, we saw the market’s internals deteriorate quickly, which forced me to shift my market outlook to the defensive. To be clear, I don’t think this is going to last long, but time is only one part of the equation. If the decline doesn’t last long, but drops hard, we would still be wise to stay in the comfort of cash. But just because the market is risk-off right now doesn’t mean that the trader’s work is finished. So, I want to talk about what I do during such volatility to prepare myself for an inevitable bottom… The Strong Still Get Stronger Those that follow my sessions in the TheoChat live room – especially those that are with me in the Trinity Trade – know that I’m a big believer in the

It’s been a volatile earnings season to say the least. Coming into last week, we saw positive market internals, but then, on Friday, a sudden, tremendous shift occurred. This earnings season has been marked by two-sided action. Earnings misses have been punished viciously, while earnings beats have only been modestly rewarded. Now we’re starting to see money flows into more defensive sectors of the market. This is rather concerning in the near-term.  Here’s what I mean…  Bulls No Longer Have Benefit of the Doubt An updated look at the sector leader scoreboard shows that bulls really have their work cut out for them now. Literally none of these sectors are growth or bullish-oriented. This tells us that money has been seeking safety within the market. The speed at which this developed is noteworthy. Just last week, tech was the top-performing sector, but now with consumer staples capturing short-term momentum, it’s

We just saw both the Nasdaq and S&P 500 close at their highest weekly level in history. From a purely technical standpoint, this would imply that another leg higher in stocks is in the works. But all year, we’ve heard stories about bad market breadth, negative market sentiment, tariff tantrums, a clueless Fed, and more. Yet our reliance on sector leadership telling the real story about what’s happening in stocks has kept us in the loop. And this week, I’m very excited to share this latest and greatest bullish development…  The Rising Tide Lifts All Boats Another week has passed and we have a couple key updates on the sector leaderboard. Technology has emerged as the one-week leader, which sends a strong signal that stocks have entered breakout mode. We’ve also seen communications emerge as the leader again on the 30-day and year-to-date basis, which is hardly a bearish signal.

Stocks are looking to cap off another impressive week, and register their highest weekly closes in history. Of course, we’ll see how we shape up into the closing bell, but the recent price action really is a testament to the idea that sentiment follows price, not the other way around. Here we have stocks within a spitting distance of all-time highs, yet various sentiment surveys are filled with loud and convinced bears. I’m not going to lie to you, this is music to my ears. New all-time highs are imminent, and most are completely unprepared.  But we’ve been singing a bullish tune for a while now – here’s why…  Perception Matters More than Reality One of the most important skills to cultivate as a trader is to hold two conflicting, and even contradictory ideas in your mind at the same time. I am a big believer in not getting bogged

A few weeks ago, I shared my thoughts on how Trump’s presidency could turn out to be bullish for the Chinese equity market.  I’m still very much in this camp, but now I want to take it a step further, especially after recent headlines of individuals like David Tepper boosting his allocation to China. I can’t say whether Tepper sees what I see, but I do know that there is a very specific theme brewing in that country, and it’s what I want to share with you today.  Check this out… Follow the Money Flows In my time here at TheoTrade, many have heard me say that I want to own the strongest stocks in the strongest sectors in the strongest countries. Well it just so happens that for a majority of this time, the strongest country has been the United States, which has kept our focus at a domestic

Over the past few weeks, we’ve seen the market’s trading range become increasingly narrow. But there is some context to this, because we’ve seen tremendous intraday volatility, or wide trading ranges on the daily timeframe. This is why I love to say, “When in doubt, zoom out.” Because even though there’s a healthy level of fear in the market, its internals continue to shape up nicely.  Here’s what I mean…  The Real Story on Rates One of my favorite aspects of being a trader focused on money flows and price action above all else is that it gives me something tangible to compare against the gossip of the day. This is especially the case when the phrase, “A bull market climbs a wall of worry,” is considered. Every time there’s a bout of market volatility, we start to hear about an imminent financial meltdown, or even more – a housing

Stocks have slowly but steadily crept higher since the start of the new year, and by most metrics I track, it looks like this trend is set to continue into the near-term future. But already this year, I’ve heard stories of traders blowing up their accounts due to the market’s volatility. But when you zoom out and realize that the Dow only corrected around 7% from its last all-time high, it’s painfully obvious that these traders were taking way too much risk. But today, I want to talk about the nature of this volatility that we’ve seen, because it’s different from what we’ve seen in recent memory.  Here’s what I mean…  When in Doubt, Zoom Out We’re in a trading environment where headline risk is the highest it’s been in years. The thing to understand with this volatility is that it’s mainly on an intraday level. In other words, we’ve

Some moments in time pack more activity into a single week than in years past—and I believe we are living in one of those moments. Markets act as a discounting mechanism; in other words, they continuously bring future expectations into today’s pricing. Today’s headline risks are as elevated as they have been in recent memory. That’s why it’s more important than ever to filter out the noise and focus on what really matters: the price action. The sectors reveal the full story. Take a look… When Winners Lead, The Rest Follow Last week was certainly memorable, and it looks like this week is off to a similar start. Two consecutive gaps lower during Sunday futures trading isn’t something you see every day. We’re often advised not to judge a book by its cover. While that may not be the best advice ever, it does apply to the markets. Think of