Jonathan Krinsky, Managing Director at BTIG, discusses the importance of market analysis and his mean reverting approach to trading. The podcast also explores the similarities between golfing and investing, the significance of confirmation and risk management in counter trend trades, current market factors affecting performance, potential support levels, and the importance of finding your own approach in analyzing markets.
Jonathan focuses on identifying mean reversion opportunities in the market by considering market sentiment, volume patterns, and leadership stocks.
Key support levels to watch in the current market environment are the 4,200 level in the S&P 500 and the 320 level in the QQQs.
Gold's performance, investor sentiment, and the copper-to-gold ratio are significant indicators for analyzing the broader commodities market.
Deep dives
Jonathan Krensky's mean reversion approach to the markets
Jonathan Krensky, Chief Technical Strategist at BTIG, takes a mean reverting approach to analyzing the markets. He looks for signs that weakness in the market is coming to an end and it's time to start buying. He discusses the indicators he pays attention to and the things he looks for to indicate a potential mean reversion trade. While he acknowledges that trend following and momentum strategies can be powerful, he focuses on identifying opportunities for mean reversion, particularly in shorter-term institutional trades. Jonathan emphasizes the importance of considering market sentiment, volume patterns, and leadership stocks to determine potential mean reversion setups.
The current market environment and potential support levels
The current market environment is experiencing weakness, with the S&P 500 and QQQs facing downward pressure. Jonathan highlights key support levels to watch, such as the 4,200 level in the S&P 500 and the 320 level in the QQQs. He also introduces the concept of volume at price, which analyzes the volume traded at different price levels. He explains that areas with high volume history could slow price movement, while areas with low volume history could facilitate quicker price movement. Jonathan suggests that if these support levels are tested and hold, there could be potential mean reversion setups. He also mentions the importance of observing market sentiment, volume patterns, and leadership stocks to confirm potential reversals.
An overview of the commodities market, gold, and copper
Jonathan discusses the commodities market, highlighting the mixed nature of various commodities. While crude oil has shown strength, he mentions that sentiment may have become overly optimistic. In contrast, gold has been frustrating, experiencing consolidation and lower highs since May. Jonathan notes that gold's performance has been relatively good considering the backdrop of rising real rates and dollar strength. He mentions the importance of analyzing investor sentiment, positioning, and the interplay between different asset classes. He also emphasizes the significance of gold's performance and the ratio between copper and gold as indications of the broader commodities market.
Market Performance Discrepancies
The podcast episode discusses the significant performance discrepancies in the stock market. While the S&P 500 has seen substantial gains driven by a handful of mega-cap stocks, the average stock has experienced poor performance. This divide between the top stocks and the rest of the market creates challenges for institutions trying to outperform their benchmarks.
Breath and Internal Market Dynamics
The episode highlights the importance of market breadth and internal market dynamics. The speaker emphasizes that the overall market performance can be misleading, as breadth indicators reveal a poor performance from the average stock. The analysis suggests that either we are witnessing the slowest start to a new bull market with poor breadth expansion, or this could be the longest and largest bear market rally seen before a downturn. The internal breadth of the market and the widening gap between different sectors raise concerns about the overall strength of the market.
Jonathan Krinsky, who holds the Chartered Market Technician (CMT) designation, is a Managing Director and Chief Market Technician at BTIG. Before joining BTIG, Mr. Krinsky was the Chief Market Technician at Bay Crest Partners, MKM Partners and Miller Tabak & Company. Earlier in his career, he held a role within the Equity and Derivatives Sales & Trading Group at Miller Tabak & Company.
Jonathan provides clients with actionable technical commentary on U.S. and global equities, commodities, interest rates and currencies. Jonathan looks at the market on a global basis, taking into account inter-market relationships, sentiment and seasonality, in addition to traditional technical indicators based on price.
Jonathan is a regular contributor on Financial Sense, Bloomberg, CNBC, Seeking Alpha, and MarketWatch. He graduated from Penn State University.
Fill the Gap, hosted by David Lundgren, CMT, CFA and Tyler Wood, CMT brings veteran market analysts and money managers onto a monthly podcast.
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CMT Association is the global credentialing authority committed to advancing the discipline of technical analysis in the financial services industry. We serve members in over 137 countries. Our mission is to elevate investors mastery and skill in mitigating market risk and maximizing return in capital markets through a rigorous credentialing process, professional ethics, and continuous education. CMT Association formed in the late 1960s with headquarters in lower Manhattan, NY and Mumbai, India.
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