“We make a living by what we get. We make a life by what we give.”
- Winston Churchill
It’s not every year where The Game’s volatility has me playing it, hard, right into Christmas eve. But that’s the way The Game goes. It moves when it moves. It doesn’t have feelings or family time.
That said, now that we have another nice bull market ramp to sell into, I hope you can relax a little this afternoon and get a head start on whatever it is that doesn’t have to do with playing The Game.
Every Christmas, my old man and his boys at the Thunder Bay Fire Department would run Toys For Tots. I’ll visit a fire station and do that today. You can also donate online. Anything you can do makes a difference for children in need.
Back to the Global Macro Grind…
Raising Cash, Giving Back. I like the Christmas jingle sound of that. If you aren’t a chubby and aging Irish guy who celebrates Christmas with his family, that’s obviously cool with me.
Regardless of our religions, we can all celebrate what’s been one of the best year’s ever for Full Cycle Investors.
With US Stocks (SPY) ramping back to within 0.3% of its ALL-TIME (loved going all CAPS on that this year, eh!) closing high, Tech (XLK) led the charge yesterday. For what was #Quad2 in Q4 of 2021, Tech is up +15.2% for Q4 to-date.
Yeah, so I'll sell-SOME of that. I’ll sell some of my REITS (XLRE) and Housing (ITB) which had bright #Greenlights yesterday too. Selling-SOME of your core #Quad1 in Q122 Asset Allocations is allowed in the Mucker household over the holidays.
I’ll keep this tight for you this morning so that you can do other things but the “why on the WHEN” of this move is:
A) There’s more downside than upside in my SP500 Risk Range for the first day in the last 3
B) Three days ago there was 8:1 upside vs. downside in my SPY range, don’t forget… and
C) That day we capitalized on a +22% implied volatility PREMIUM (vs. 30-day realize) on SPY
As of this morning’s green open, SPY’s PREMIUM has melted into a very complacent (bears covered, bulls chased) Implied Volatility DISCOUNT of -17%. Tech (XLK) has an IVOL DISCOUNT of -17% vs. 30-day Realized Volatility too.
The only better time to RAISE CASH than WHEN things are signaling immediate-term TRADE #overbought is when CASH itself is signaling immediate-term TRADE #oversold. In this case, we’re talking about cold hard American Cash:
A) US Dollar Index (and the UUP) is approaching the low-end of my Risk Range™ Signal… as
B) The British Pound (GBP/USD) is signaling immediate-term TRADE #overbought … and
C) Commodities (CRB Index) are signaling immediate-term TRADE #overbought in kind
Yep, especially for those of you who have friends & family who were late to the Commodity and INFLATION Cycle party, help them help themselves over the holidays, selling some Oil and buying some Bonds, eh!
As the great Canadian singer, songwriter, and painter Joni Mitchell sang in Dreamland, “it’s a long, long way from Canada – a long way from snow chains”…
And every day of my life I thank God for blessing me with the opportunity to leave my homeland and play The Game alongside of all of you. On behalf of all my teammates and I @Hedgeye, thank you and have a Merry Macro Holiday!
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 1.39-1.51% (neutral)
UST 2yr Yield 0.57-0.70% (neutral)
SPX 4 (bullish)
NASDAQ 14,913-15,772 (bullish)
RUT 2136-2254 (bearish)
Tech (XLK) 164.81-175.94 (bullish)
Housing (ITB) 76.03-83.98 (bullish)
REITS (XLRE) 48.41-50.62 (bullish)
Shanghai Comp 3 (bullish)
VIX 17.07-23.41 (bearish)
USD 95.88-96.79 (bullish)
Oil (WTI) 68.12-73.49 (bearish)
Nat Gas 3.60-3.99 (bearish)
Gold 1 (bullish)
Copper 4.18-4.41 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
