All posts by T3 Live
David Prince Interview: How to Succeed as a Trader in 2022
In this exclusive interview, David Prince, leader of Inner Circle, discusses what’s working and what’s not in 2022. David discusses: Why so many traders have the wrong goals Why 2022 has been so different than 2021 and 2020 When to bet on low quality stocks, and when to chase them The trick for knowing when to dump a popular “story stock” The reason stock picking is the easy part The role psychology plays in your probability of success Go here to learn more about Inner Circle =>
Continue Reading -->Oil Bulls Back Off
Traders are still cautious towards risk assets like stocks and Bitcoin. And interestingly, traders grew less bullish on oil this week, just in front of today’s drop in crude prices. IMPORTANT: when we reference “traders” in this article, we are specifically referring to T3 Sentiment Survey respondents. SPX: Traders Are Still Cautious Four weeks ago, bullish sentiment on SPX fell to 19% – by far the lowest reading we’ve ever had in our admittedly short 20 week history.It has since rebounded to 39%, which is still a fairly bearish reading. Bitcoin Sentiment Not Bouncing Bitcoin Sentiment was at record lows four weeks ago, and it has since bounced to 41%. That is definitely in the bearish category, even with traders speculating that the conflict in Ukraine is increasing demand for cryptos. Apple Optimism Edging Higher… Optimism towards Apple grew for the fourth week in a row, hitting 50%. That’s split right down the middle. Tesla Split Down the Middle Tesla (TSLA) sentiment is at 50% – split down the middle, just like Apple. Gold Bullishness Sliding Lower Even with the Ukraine-Russia war intensifying and inflation going through the roof, gold sentiment has drifted lower for weeks now. Oil Sentiment Drops Oil has led the market in 2022, but sentiment is dropping as many traders anticipate the highs being in. What Happens Now? Traders are still cautious on the market for good reason, including:The massive inflation spikeCentral banks pulling back accommodationThe conflict in UkraineThe overall crash in risky stocksNow we’ll see if traders are merely complacent ahead of another potential drop.
Continue Reading -->Are Traders Bullish Enough on Oil?
Traders remain cautious towards risk assets like stocks, as judged by our latest sentiment survey. But what’s really interesting is that traders aren’t more bullish on gold and oil, given their recent big runs. Let’s jump in. IMPORTANT: when we reference “traders” in this article, we are specifically referring to T3 Sentiment Survey respondents. SPX: Traders Still Cautious Three weeks ago, bullish sentiment on SPX fell to 19% – by far the lowest reading we’ve ever had in our admittedly short 19 week history.It has since rebounded to 42%, but that is still a fairly bearish reading. Bitcoin Sentiment Off the Lows Bitcoin Sentiment was at record lows two weeks ago, and it has since bounced to 40%. That is definitely in the bearish category. Apple Optimism Growing… Optimism towards Apple grew for the third week in a row, hitting 45%. Again, that’s still in the bearish camp. Tesla Still Not Feeling Much Love Tesla (TSLA) sentiment is off the lows, but you definitely can’t say it’s a loved stock as just 36% of traders think it is going up. Gold Bullishness Falls Oddly enough, gold bullishness has fallen for weeks – even with the Ukraine-Russia war intensifying, and inflation going through the roof. Oil Sentiment Drops Oddly enough, oil sentiment has actually dropped in recent weeks, even with oil going straight up. Crude oil futures hit a shocking $130.50/barrel on Sunday evening to top off a parabolic move from the $90’s in late February. What Happens Now? Traders are still cautious on the market for good reason, including:The massive inflation spikeCentral banks pulling back accommodationThe conflict in UkraineThe overall crash in risky stocksBut sentiment has growth less bearish over the past few weeks. Now we’ll see if traders are being fooled.
Continue Reading -->People Still LOVE Oil
Traders remain somewhat cautious towards risk assets, as judged by our latest sentiment survey. And in fact, they seem to view the SPX, Bitcoin, Apple (AAPL), and Tesla (TSLA) as one big asset. But the biggest takeaway is that traders still love oil… which is no surprise given the Ukraine situation. Let’s jump in. IMPORTANT: when we reference “traders” in this article, we are specifically referring to T3 Sentiment Survey respondents. SPX: Bulls Easing Back In Two weeks ago, SPX sentiment fell to an all-time low of 19%. It’s since more than doubled to 40%, which still counts as bearish. Bitcoin Sentiment Bounces Bitcoin sentiment bounced up to 40% this week, exactly matching the SPX. The bounce is to be expected given that Bitcoin came off the lows. Apple: Right in Line Apple (AAPL) sentiment is right in line with the SPX and Bitcoin at 39%. Again, off the lows but definitely not bullish. Tesla: Also In-Line Tesla (TSLA) sentiment fell to 22%, an all-time lows, two weeks ago. It’s since bounced up to 36%, roughly in-line with the SPX, Bitcoin, and Apple. Gold Still Feeling Some Optimism Gold sentiment hit a record high of 81% two weeks ago, and it’s since fallen to 67%. Still, that leans towards optimism. Oil Still Feels the Love Oil has led the market in 2022, with OIH up 31% and XLE up 24%. So as you would expect, traders have been very bullish on oil. And with the Ukraine situation continuing to unfold, oil is up big to start the new week. What Happens Now? Traders are not bullish, but they are definitely not as negative as they were two weeks ago. We’ll soon see if the small rise in optimism is warranted.
Continue Reading -->73% of Traders Are Bearish on Bitcoin
Traders remain very cautious towards risk assets, as judged by our latest sentiment survey. Let’s jump in. IMPORTANT: when we reference “traders” in this article, we are specifically referring to T3 Sentiment Survey respondents. SPX: Few Bulls Out Here This week, bullish sentiment on SPX fell to 19% – by far the lowest reading we’ve ever had in our admittedly short 19 week history.This week, bullish sentiment bounced to 32%, the second lowest reading in our history. And it’s dramatically below our all-time average of 59%. Needless to say, traders are very bearish overall. Bitcoin Sentiment Hits Record Low For the second week in a row, Bitcoin Sentiment hit a record low, with just 27% of survey respondents saying they are bullish on Bitcoin for the next 30 days. This is no surprise considering that Bitcoin just dropped from $44,0000 to $38,000 in the span of a few days. Apple Still Not Trusted Apple (AAPL) delivered a monster earnings report 4 week ago… but nobody cares. Just 34% of traders are bullish on Apple, up slightly from last week. Tesla Still Not Feeling Love Tesla (TSLA) sentiment fell to 22% last week, and this week it bounced to 31%. Still, that’s very low compared to the long-term average of 51%. Gold Bullishness Falls Gold sentiment hit a record high of 81% last week. And it fell back down to 68%, even with gold spiking up big time this past week. Oil Sentiment Drops Oil has led the market by a country mile in 2022 with OIH up 30% and XLE up 23%. But it appears that the late week pullback in oil priced spooked the bulls. Now 67% of traders believe oil will rise over the next 30 days. What Happens Now? Traders are still very bearish for a variety of reasons, including:The massive inflation spikeCentral banks pulling back accommodationThe conflict in UkraineThe overall crash in risky stocksAs we pointed out last week, sometimes (but not always) the market bottoms when traders show maximum fear. We’ll see if that’s true this time around.
Continue Reading -->81% of Traders Are Bearish
Bullish sentiment just fell a cliff. We created this sentiment survey in October 2021, so we have a short history. Still, it’s fascinating that we have all-time lows in bullish sentiment on the SPX, Bitcoin, Apple (AAPL), and Tesla (TSLA). Meanwhile, bullish sentiment on gold and oil hit record highs. Let’s dig in. SPX Mood Is Super Bearish Last week, bullish sentiment on the S&P 500 was 58%.This week, it dropped to just 19% – by far the lowest reading we’ve ever had in our admittedly short 18 week history. Traders appear to be spooked by the market dropping into the end of last week, combined with existing concerns over inflation and central banks removing the punch bowl. Plus, the Russia-Ukraine conflict is adding tension. Bitcoin Sentiment Collapses Bitcoin sentiment hit a record low this week, with just 30% of surveyed respondents saying they think it will go up over the next 30 days. This appears related to a general fear of risk assets — which is the big theme this week. Apple Bears Are Here Apple (AAPL) delivered a monster earnings report 3 week ago… but it doesn’t seem to be helping. Just 32% of respondents think the world’s biggest stock will rise, Tesla Gets No Love Tesla (TSLA) really has a lack of love, with just 22% of traders saying they are bearish. Gold Bulls Rise With traders seeking safety, and gold surging last week, bullish sentiment on gold hit record highs at 81%. Traders Still Love Oil Oil has raged higher in 2022 to hit 8-year highs, and as you might expect, energy stocks have led the market. So it’s no surprise that oil remains in favor, with 80% of surveyed traders expecting oil to rise. The Russia-Ukraine conflict has been a driver of oil prices, since there are worries about supply disruptions in the region. What Happens Now? Traders are very, very bearish. And that’s no surprise given the aforementioned concerns over inflation and central banks pulling back after a very long bull market. Sometimes — but not always — the market bottoms when traders show maximum fear. It will be interesting to see if that’s the case this time around.
Continue Reading -->Traders Are Starting to Like Bitcoin Again
What’s the big story in today’s sentiment report? The Bitcoin bulls are returning. So let’s get to it. SPX Mood Is Semi-Sour SPX sentiment is off the lows, but in semi-sour territory at 58%. This is slightly below the long-term average of 63%, and basically flat from last week. Bitcoin Sentiment Rising Bitcoin sentiment is up for a second week in a row, which is no surprise given Bitcoin’s big pop over the weekend. Apple Mood Unchanged Apple (AAPL) delivered a monster earnings report after the close two weeks ago, which improved the mood in short order. But the mood is basically flat from last week: Tesla Looks Like Apple Tesla (TSLA) is not much different from Apple – up from the lows but largely unchanged. Gold Still All Over the Place Gold sentiment has been largely all over the place from week-to-week, which is no surprise given that it’s so hard to get a read on the metal itself. Traders Still Love Oil Sentiment on oil has been bizarrely stable for the past 5 weeks in the 70% range. And that’s no surprise given how strong oil and related stocks have been in 2022. What Happens Now? Traders have gone from very bearish 3 weeks ago to relative neutral now. We would likely need more upside to get traders outright positive on the action. So this feels like a bit of a no man’s land. What are your thoughts? Let us know in the comments below!
Continue Reading -->Which Stocks Are Working in 2022? Not a lot…
2022 has been a crazy year for stocks. After 3 years of eye-popping gains, the S&P 500 is down 5% with major weakness in tech stocks and small caps. We’ve seen the collapse of the Ark Innovation ETF (ARKK) amid a larger crash in growth stocks. And earnings season has been total chaos with plenty of winners (SNAP, AMZN) and losers (FB, SPOT). We even had “Ugly Chart Time” on January 21. But let’s shift our tone and ask a more optimistic question: what has been working in 2022? The answer overall is… energy, banks… and not much else. The Energy Stock Craze Is Real In April 2020, oil prices went negative when demand collapsed because of the COVID-19 pandemic. Fast forward to February 2022, and oil is above $90 at 8-year highs. So as you might expect, energy stocks are BOOMING. The Energy Select Sector SPDR Fund (XLE) fund is up 27% in 2022 after a 46% run in 2021. OIH is also doing well, up about 25%. What else is working? Banks Are Doing Okay With the rising rate environment, banks are up in 2022, with the Financial Select Sector SPDR Fund (XLF) rising about 4%: But like everything aside from energy, XLF is off the highs and peaked back in January. And outside of energy and banks, there are very few stocks up in 2022, period. We just saw big post-earnings pops in Amazon (AMZN), Snap (SNAP), and Pinterest (PINS)… but they are all down YTD. And what’s not working in 2022? While the embattled ARKK recently came off the lows, it’s still down 23% year-to-date. Time will tell if the Jim Cramer “drowning” incident on January 27 marked a long-term bottom: I’ve disagreed with most of Cathie’s investment theses since last year (been in $SARK since its inception), but this is just brutal after today’s price action… @jimcramer $ARKK $TSLA $COIN $HOOD pic.twitter.com/oJ3YynrGfP — sᴇɴᴛɪɴᴇʟ 🎲 (@KryptoSentinel) January 27, 2022 Small caps remain a sore spot, with IWM down 11% YTD, more than double the SPX’ loss: Social media has been in rough shape, with Meta Platforms (FB) down 30% YTD after its weak earnings report: Meme stocks are also feeling the pain, with AMC (AMC) down a crazy 42% YTD. The cannabis sector had a horrible 2021 and things aren’t looking much better this year, with MSOS off 14% so far: But overall, traders appear to have destressed a bit, because the VIX is well off the highs: The Big Picture: Derisking The big picture in 2022 remains the same: traders fear rish. Yes, we are off the lows and sentiment has improved, but traders are looking for confirmation that the recent bounce can extend. Where can that confirmation come from? Growth stocks picking up (ARKK is the easy way to watch them) Small caps and tech showing relative outperformance Traders buying the dip in risky sectors like biotech and cannabis)
Continue Reading -->Do You Still Hate the Market?
For the past two weeks, traders have hated the market. And they were right, because stocks dropped and the VIX hit a 13-month high. But with the market rallying off the January 24 SPX low at 4222, the mood has brightened a bit this week. SPX Bulls Coming Back to the Party Our survey has not had more bulls than bears since January 2, 20221. So we can say our community has been pretty accurate in terms of calling the action.Now, 59% of surveyed traders are bullish, which is just slightly below the long-term average of 63%. Bitcoin Sentiment Split Bitcoin has bounced a bit from the January 23 lows, when sentiment bottomed out at 34%. Now, the crowd is split 50-50 between bulls and bears. Apple Bulls Return After Earnings Apple (AAPL) delivered a monster earnings report after the close Thursday and the stock popped nicely. So the mood has gotten much more positive, with 67% of surveyed traders saying they are bullish for the next 30 days. Feeling About Tesla Perk Up Tesla (TSLA) is down almost 20% year-to-date, and that appears to be attracting some traders. 55% of surveyed traders are now bullish, up from just 32% two weeks ago. Gold Bulls Step Away Gold struggled last week, so sentiment on gold soured once again. Now just 53% of surveyed traders are bullish on gold. Traders Still Love Oil Oil has been the place to be in 2022, with XLE up 18.3% and OIH up 23.0%. What Happens Now? For two weeks, we asked the question “Does Negative Sentiment Mean We Are Bottoming Out?” For now, the answer is yes. Now with sentiment in more neutral territory, it will be interesting to see if the market can creep crawling higher.
Continue Reading -->The ARKK ETF Bloodbath: 7 Things You Need to Know
The ARK Innovation ETF (ARKK) was poster child for the post-Pandemic stock boom with its blistering 149% in 2021. Cathie Wood, CEO and CIO of Ark Invest, became a bonafide rockstar in the industry, and some folks thought she could be the next Peter Lynch or Warren Buffett. In February 2020, Bloomberg called her “the best investor you’ve never heard of.” But ARKK has fallen on hard times as expensive growth stocks came back down to Earth. So let’s go through 7 things you need to know about the ARKK ETF. 1) ARKK Invests in “Disruptive Innovation” Few people will ever read the prospectus for an ETF — but we just did. So what is the ARKK ETF all about? ARKK specializes in what it calls “disruptive innovation.” In their words: The Adviser defines “disruptive innovation” as the introduction of a technologically enabled new product or service that potentially changes the way the world works. The Adviser believes that companies relevant to this theme are those that rely on or benefit from the development of new products or services, technological improvements and advancements in scientific research relating to the areas of genomics* (“Genomic Revolution Companies”); innovation in automation and manufacturing (“Automation Transformation Companies”), transportation, energy (“Energy Transformation Companies”), artificial intelligence (“Artificial Intelligence Companies”) and materials; the increased use of shared technology, infrastructure and services (“Next Generation Internet Companies”); and technologies that make financial services more efficient (“Fintech Innovation Companies”). In plain English, this means that ARKK invests in expensive, high-beta tech stocks. And according to the prospectus, ARKK has to invest at least 65% of its assets in companies that follow the “disruptive innovation” theme. This is why ARKK can’t just go to cash like an individual trader might. The fund was launched on October 30, 2014, and currently has $16.1 billion in assets. 2) ARKK Is in Some WILD Stocks You know an ETF is wild when the most stable stock in its top 10 holdings is Tesla (TSLA)! All of ARKK’s top 10 holdings are expensive, high-beta stocks that move really far, really fast: Tesla (TSLA) Zoom (ZM) Teledoc (TDOC) Roku (ROKU) Coinbase (COIN) Exact Sciences (EXAS) Unity Software (U) Spotify (SPOT) Intellia Therapeutics (NTLA) Uipath (PATH) ARKK has a beta of 1.54, meaning for every 1% the S&P 500 moves, ARKK moves 1.54%. That means ARKK moves about 50% faster than the S&P. Unfortunately, since ARKK peaked, those fast moves have been mostly to the downside. 3) ARKK Was In the Right Stocks at the Right Time When COVID-19 hit in early 2020, people began spending way more time at home, particularly for work. That was bad for some sectors like airlines and restaurants. But it benefited some of ARKK’s biggest holdings like Zoom (ZM), Teledoc (TDOC), and Roku (ROKU), all companies which benefited from more people being at home. Plus, ARKK’s biggest holding was Tesla (TSLA), which had a monster 2020. . You can call it luck or skill — but Cathie Wood got in the right names at the right time. 4) The Right Names Became the Wrong Names This chart compares the S&P 500 (on top) with ARKK (on bottom). ARKK peaked at $160 on February 16, 2021… and then started sliding. That was 11 months before the S&P 500 topped out at on January 4, 2022. What happened? Why did ARKK flame out so much earlier? Simple — because as the economy reopened ,“stay at home” names like Zoom (ZM) and Teledoc (TDOC) began dropping. For example, Teledoc has falled 82% off its highs: Traders’ declining tolerance for risky stocks also seemed to be a factor. With the Fed pulling away the punchbowl to fight inflation, traders started shying away from the wild names. So small caps underperformed in 2021, as did the ultra high-valuation tech stocks Cathie Wood favored. New IPO names were also messy. For example, ARKK has been a repeated buyer of Robinhood (HOOD), which has been in a hideous downtrend since its post-IPO peak. Meanwhile, traders were shoveling cash into traditional tech stocks like Apple (AAPL), Microsoft (MSFT), and Nvidia (NVDA). Plus, energy, housing, and financials were big outperformers in 2021. You don’t see those types of stocks in ARKK. And in 2022, energy is the only sector that’s shining. OIH is up 24.3% and XLE is up 19.4%, while the S&P 500 is down -9.8%. Meanwhile, ARKK is down 31%. And if we’re considering all-time highs, ARKK is -59.1% off its high, while the SPX is off 10.8%. 5) ARKK’s Long-Term Performance Is Still Pretty Amazing Even with ARKK’s underperformance in 2021 and 2022, the fund is a staggering long-term success According to Morningstar, ARKK has an 5-year average return of 28%, almost doubling its category average. In this chart, ARKK is the blue line, and you can see it’s still way above its category (red line): As of this article, Morningstar rates ARKK as 4 out of 5 stars, putting in the top 32.5% of funds relative to category peers. However, Morningstar ratings are backward looking so they’re not helpful in judging future performance. 6) People Are Waiting for Cathie Wood to Give Up If you follow social media chatter, particularly on Twitter, you’ll know that Cathie Wood has received a lot of criticism for her bold predictions, For example, she recently said Bitcoin could hit $1 million by $2020. Bitcoin would multiply in price 27 fold for that to happen. In late December, she said she expected her strategy to deliver a compound return of 40% over the next five years. That equates to a 460% return. And many traders are desperate to see Wood capitulate and turn bearish, the idea being that if she gives up, high-growth stocks wilh have bottomed. Interestingly, CNBC’s Jim Cramer “drowned” ARKK on his Mad Money show: I’ve disagreed with most of Cathie’s investment theses since last year (been in $SARK since its inception), but this is just brutal after today’s price action… @jimcramer $ARKK $TSLA $COIN $HOOD pic.twitter.com/oJ3YynrGfP —
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