Over the last few weeks, our patient approach to the market following December’s volatility has continued to pay off.
In last week’s report, we outlined how we’re viewing this recent dip as yet another low-conviction dip-buy, and why we anticipate messy and whipsaw-prone price action before a tradable bottom is found.
There’s little to update on since that report.
Spot flows have been neither bullish nor bearish, but neutral. We need to see demand come in from investors to form a tradable bottom. The market appears to be in oversold conditions, making this a logical place for this to happen.
Elevated leverage in the derivative markets has made futures the dominant force on price action. There are early signs of a short squeeze developing, but we need to see investor demand support it.
Apart from a few exceptions, we’re sitting out most of the action in the alts for now.
