“There is a crack in everything. That’s how the light gets in.”
- Leonard Cohen
There’s a fractal beauty about short squeezes in #Quad2, isn’t there? Whether it was CAR’s +150% intraday gain yesterday or Blood Bath & Beyond (BBBY) squeezing +75% higher in the post market last night, that’s how The Game goes.
Not to be confused with the Squid Game (where people die), all that really happens during short squeezes is that the light overcomes some of the darkness of all that evil short interest. Since I’m sometimes called an evildoer on that front, I’d know!
In Japan they call something like this “Kintsugi.” The word itself means “golden (kin) repair (tsugi)” and, as Aidan McCullen goes on to explain in Undisruptable “it treats breakage and repair as an integral part of an object’s history.” (pg12)
Back to the Global Macro Grind…
I like this retired Irish athlete turned decision-making #process guy, McCullen. He has a chapter in his book called Kintsugi Thinking. He uses it as a way to reframe your baggage and biases.
“It’s a valuable lens through which to see the world. In our increasing VUCA (Volatile, Uncertain, Complex, Ambiguous) world, we will need to experiment as we explore the future and to do that successfully we must learn to embrace mistakes.”
Evidently not all hedge fund Masters of The Universe embraced their mistakes from the last time #Quad2 Short Squeezes happened (see #Quad2 in Q4 of 2020 and Q1 of 2021 for replays). For those of us making money, that’s a very good thing.
‘Oh but that’s just nonsense… these companies are grossly overvalued… this can’t be happening.’
Ok. But it just happened, again. It also happened within the lens of a trifecta of #Quad2 in Q4 all-time closing highs with SPY, NASDAQ, and the Russell 2000 doing the all-time thing on the same day. All-time remains a long time.
What else happened yesterday? Why the 61st all-time high for SPY of 2021?
A) It “felt” like stocks should go up (because I’m still long Ford)
B) US Auto Sales for OCT #accelerated +6.6% sequentially from their “supply chain bottleneck” lows of SEP
C) SP500 Earnings #accelerated to +40.0% year-over-year growth (after starting Q3 reporting at +20-30%)
It “felt”? Are you kidding me? I know this is frustrating some of you. However, for many more of you, your PAs (personal accounts) and portfolios are hitting all-time closing highs, daily, at this point. Who isn’t long Ethereum (ETHE) with us?
I’m thinking your “feelings” about your financial situation provide upside to our Wall Street high Nowcast for Q4 GDP.
But I could be wrong on that. I can be wrong on pretty much anything, obviously. Anytime I’ve been asked the standard Institutional Investor question on “where could you be wrong on #Quad2 in Q4?”, my answer has been:
A) I could be wrong on all of it… but
B) If I am wrong, I think I’ll be wrong to the upside on both GROWTH and INFLATION
Since some of you seem to like hearing about my CAR and my PA positions, I’ll give you another sexy stock tip this morning. Warning: I could be really wrong on this one.
A) I bought Apple (AAPL) on red after they reported reality … because
B) I want to be Long of Supply Chain Bottlenecks
Seriously, why wouldn’t you be long of yesterday’s bad news when it can become tomorrow’s better news? The more obvious the cracks are to consensus bears, the more light that can get in.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.50-1.71% (bullish)
UST 2yr Yield 0.40-0.52% (bullish)
SPX 4 (bullish)
RUT 2 (bullish)
NASDAQ 15,088-15,745 (bullish)
Tech (XLK) 157.45-163.34 (bullish)
Shanghai Comp 3 (bearish)
VIX 14.16-17.45 (bearish)
USD 93.15-94.24 (bearish)
Oil (WTI) 82.01-84.97 (bullish)
Nat Gas 4.93-6.39 (bullish)
Gold 1 (bearish)
Copper 4.31-4.68 (bullish)
MSFT 316-340 (bullish)
AAPL 146-153 (bullish)
GOOGL 2 (bullish)
NFLX 649-700 (bullish)
TSLA 1020-1253 (bullish)
Bitcoin 59,340-66,805 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
