Bitcoin Sentiment is Running Hot [DIRTY DOZEN]

The winners have attained a mind-set—a unique set of attitudes—that allows them to remain disciplined, focused, and, above all, confident in spite of the adverse conditions. As a result, they are no longer susceptible to the common fears and trading errors that plague everyone else. ~ Mark Douglas, “Trading in the Zone”

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at Japan’s Nikkei making 29-year closing highs, rank countries by their ability to innovate, pitch the long thesis for a little known Japanese powerhouse, and then discuss the technical bull case for the yen. Finally, we end with a chart of a bull flagging silver miner, a Price Thrust signal on the Qs, bitcoin sentiment hitting all-time highs, and a highly shorted AI stock with a technical setup to drive a forced covering rally, plus more…

Let’s dive in.

***click charts to enlarge***

  1. Japan’s Nikkei saw its highest weekly close since November of 91’ last week.


  1. Bloomberg Intelligence scored 135 economies on their propensity to innovate and absorb existing technology drawing on measures of institutional quality, IT infrastructure, the business climate, and human capital. They found that Japan, the U.S., and Germany show the greatest potential.


  1. There’s a number of overlooked, underpriced, well-run companies in Japan that we’re digging into. Murata Manufacturing (6981) is at the top of this list. Brandon wrote this company up last month (you can find the report here). The chart below is a quarterly.

This stock has incredibly strong secular tailwinds and a lot of room to rise. We’ll be initiating a position soon.


  1. Last week USDJPY closed at a four-year low. The 50-year monthly chart suggests it could go much lower still.


  1. According to BofA, Gold minus Oil annual net return just spiked to its highest level since 1979. Does that mean anything? Probably not…


  1. Speaking of gold… PMs may be breaking out again after working off most of their overbought conditions over the last few months. There’s plenty of strong technical setups in the miner space. Here’s a weekly of Coeur Mining Inc, (CDE). It just broke out of a 4-month bull flag.


  1. This chart from CS shows that the US typically underperforms when non-US Industrial Production momentum is greater than 3% — it recently surpassed 15%. This fits in with our cyclical USD bear theme which I’ve written about here. It’s time to start adding some international exposure if you don’t already got some.


  1. This chart via Bloomberg is incredible…


  1. Breadth perked up last week. @MacroCharts noted that “the Nasdaq 100 rallied +9.4% over five days — among the TOP 1% in its 35-year history. This was also the Nasdaq’s 2nd biggest Price Thrust since March 2009 *(the biggest was after the March 2020 low). Price Thrusts are usually seen after Major lows in the Stock Market… As a general rule, the stronger the initial price move, the more Bullish the longer-term implications for Stocks… As long as the market remains above the September-October lows, this is a potentially Bullish signal which could carry higher into year-end or longer.”

I agree with MC. You can find the bullish thesis we put out last month here.


  1. According to my indicators, sentiment and positioning are now biased long and are becoming a minor headwind for stocks. Though, as BofA’s B&B Indicator shows, there’s still plenty of room for sentiment to improve before it flashes a major sell signal.


  1. Bitcoin is in the full-on expansion mode that we said was coming. Sentix notes though that short-term sentiment is running a bit hot so we shouldn’t be surprised if we get a pullback or consolidation here. Sentix writes:

“With +55 percentage points, the sentix sentiment for Bitcoins reaches a new all-time high. At the same time, the medium-term strategic bias shows a willingness to take profit: the basic conviction cannot keep up with the exhausted mood and has lost 13 percentage points in the last 3 weeks… The price reaction has come about, now it is time to rethink: the price risks are increasing dramatically and the risk/return is becoming increasingly unfavorable.”

I disagree with that last bit though. The trend in bitcoin is just getting started.


  1. Brandon, our resident value ninja, tweeted out a list of highly shorted companies with strong technicals and compelling fundamentals. Ontrak (OTRK) is one of these companies and checks all the boxes. You can find his entire thread here.


Stay safe out there and keep your head on a swivel.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.