“It’s difficult to change overnight, but if you are persistent and take one step at a time you will see results.”
- Jack LaLanne
I don’t always go net LONG when I am bearish… but when I do, I trigger plenty of people.
Back to the Global Macro Grind…
Many called Jack LaLanne “The Godfather of Modern Fitness.” Some call me The Quadfather. If you are now ready to puke, I don’t blame you. I’m actually trying to trigger you a little bit here this morning. I hope that’s ok. It’s Friday.
While hope is not a risk management #process, I hope it’s ok with you that I go both ways too.
Yep, I’ve been doing it for years. Especially when economies like Russia (RSX), South Korea (EWY), and the United States of America (QQQ) are entering #Quad4, I’ll frequently go net SHORT of their stock markets.
Then, when those markets signal immediate-term TRADE #oversold within their Bearish @Hedgeye TRENDs, I’ll cover-SOME of those Core Short positions… and yes, I’ll buy-MORE of my Core Longs.
Yesterday, in Real-Time Alerts, for example, I went to 8 LONGs and 1 SHORT.
“Huh? But, but…” There really is no but. And I definitely don’t care about why. RTA (Real-Time Alerts) isn’t a portfolio. It’s a real-time coaching and signaling tool that should help you think like a Hedge Fund Pro who has been a successful short seller for many years.
In sharp directional contrast (when stocks were higher), on March 24, I had 4 LONGS and 12 SHORTS.
This isn’t “bragging” or whatever someone who didn’t play The Game that way needs to call it to feel a sense of self-righteousness in terms of how they played it. Nope. It’s simply what I did. And unlike most, I am 100% transparent and accountable for every real-time move.
Like old LaLanne taught us fitness fanatics, net positioning to markets doesn’t “happen overnight.”
Not even close. “If you are persistent” in executing on your #process “and take one step at a time, you will see results.” I have never seen a man or woman who plays The Game at the highest level go broke booking short-term gains.
Oh, I know. Some of you still want to know why I was covering and buying for the last 2 days. That’s cool. I sincerely appreciate you reading this far into the note. You’ve already read more than 80% of Americans will today.
Here’s the Cliff Notes version of why from my Top 3 Things notes that go out to Institutional Macro clients every morning by 6AM:
- USD – after RAISING CASH (and buying the US Dollar, UUP), multiple times, during the March rallies in US Equities, the simplest way to explain my Asset Allocation pivot yesterday was selling-SOME of that Large Cash position (UUP) and buying-SOME of my Core Longs with the US Dollar Index signaling immediate-term TRADE #overbought at its YTD highs (Yen and Euro Shorts = #oversold)
- #OVERSOLDS – what was signaling immediate-term TRADE oversold? A) many of my Core Shorts and B) many of my Core Longs. Why? I don’t care why. It’s just math. Whether it is US GROWTH or SMALL CAP Factor Exposures with the NASDAQ and Russell down -13.5% and -17.7% from their Cycle Highs or my European Equity Shorts, oversold is as oversold does into next week’s monthly #OPEX
- LONGS – plenty of places to be Bullish/Long of Equity – they just aren’t the places that uniquely American Consensus remains Long! What was I buying more of on red this week? Gold (GLD), Gold Miners (GDX), South Africa (EZA), Peru (EPU), Israel (EIS), Australia (EWA), Defense (ITA), etc. and on the “stocks!” side yesterday, BYD, EXPE (see Real-Time Alerts)
You see that #OPEX part I put in point #2?
Remember the time when I was layering back into the bear side, shorting QQQ, IWM, XLK, etc. in late March? That’s when #OPEX (options expiration) delivered us some epic and unprecedented Gamma Days.
From here, could US Equity Volatility do the same thing it did way back then and go to 18 or 19? A: yes. What if it doesn’t? Well then, I guess it doesn't. But that’s not how I play The Game.
Monthly Options expiration (OPEX) is next Thursday (ahead of Good Friday where the stock market will be closed). And no, I am not saying it has to play out the way it just did into March OPEX. I’m saying what I say after I did what I did, so that you have something to think about.
I didn’t make these moves because of OPEX. I made the moves I made because my #VASP (Volatility Adjusted Signaling Process) moved. And when it moves the other way, I’ll move the other way. That could be in one day or one week or whenever it moves me.
I don’t always go back to net short, but when I do, you’ll see it. Stay nimble, my friends.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 2.28-2.69% (bullish)
UST 2yr Yield 2.23-2.56% (bullish)
High Yield (HYG) 80.25-82.56 (bearish)
SPX 4 (bearish)
NASDAQ 13,688-14,369 (bearish)
RUT 1 (bearish)
Tech (XLK) 151-161 (bearish)
Gold Miners (GDX) 37.33-39.76 (bullish)
Utilities (XLU) 72.50-77.43 (bullish)
Healthcare (PINK) 26.72-28.29 (bullish)
VIX 18.84-24.95 (bullish)
USD 98.36-100.19 (bullish)
EUR/USD 1.082-1.104 (bearish)
Oil (WTI) 93.74-108.91 (bullish)
Gold 1911-1973 (bullish)
Silver 24.07-25.73 (bullish)
Bitcoin 41,367-46,683 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
