“Sometimes we are worried about specific bits of advice and seek a second opinion.”
- Sima Dimitrijev
Sometimes I struggle with telling you all what I really think.
Maybe it’s best that you tune my indecision out and seek a second opinion from Telecom Tom Lee.
I hear he’s a really nice guy. That’s nice, really. It must be nice to tell you to buy bitcoin and stocks as an “inflation hedge” (6 months ago)… and buyem now “because inflation is peaking.”
Back to the Global Macro Grind…
The aforementioned quote came from a decent #behavioral book that I reviewed over vacay titled Trial, Error, and Success – Realistic Knowledge, Thinking, and Emotional Intelligence.
Realistically, we know many people in this business are both emotional and intelligent. We also know that IQ (on paper intelligence) and EQ (emotional quotient) are two very different kinds of smart. I’ll take alpha generating Street Smarts over book-smarts all day long.
If you’re offended by that, it’s ok. It’s part of your lack of EQ (i.e. a person’s ability to understand their emotions alongside someone else’s). Empathize with me, my IQ is relatively low (lowest SAT score in my class at Yale), so I have to have some EQ, eh.
Back to Telecom Tom…
“Why call him that? Why don’t you “respect” the Old Wall guys and kiss the ring, Mucker?”
Well, let’s just start with I’d rather eat yellow Canadian snow than bow to any establishment person and/or perma bull on Wall Street. He earned the nickname by being a perma bull during the Telecom Bubble/Bust and remaining bullish on stocks as a strategist (during every crash) since!
“But, but, KM, what about Hartnett?”
In my quest to solve for my struggle this morning, let me try to tell you what I think about his or anyone else’s “market call.” I DON’T CARE.
I know. I’ve only been doing this for 23 years, but I am still working on explaining that my Go Anywhere Global Macro and Risk Management #Process doesn’t care about what intelligent sounding humans think. It only cares about what my signals and real-time economic data think.
So let’s start with something that I’ve been bullish on recently, but is signaling bearish this morning: China:
A) Shanghai Comp was -1.0% overnight breaking my immediate-term TRADE support level of 3274
B) Shanghai Comp, like EVERY other major EQUITY market in the world, is now signaling lower-highs
So, after signaling SELL on KWEB a few weeks ago, the math embedded in my #process is signaling SELL KBA this morning.
Why? Who cares why? It is what it is, despite the economic data in China still #accelerating into what we call #Quad2 in Q3. Would you prefer I didn’t tell you what the signal says? If yes, I hear you. When there’s nowhere to go in markets, it sucks.
Look on the bright side, it could suck more.
Imagine you’re with Tom, long of inflation (Energy Stocks) but bullish on the rest of stocks because inflation has peaked. Lol
With Oil getting body bagged (down another -4.7% this morning) both Commodities and Energy Stocks continue to signal SELL this morning:
A) Copper continues to crash, down -34% from where every Macro Tourist in the Federal League bought Commodities in March
B) Everything “Softs” has gone from softening to crashing (Cotton is down another -2% this morning, crashing -31% in the last month)
“Enough Mucker. Enough about crashing Copper and Cotton, should I buy Telco T’s Crypto?”
A) No
B) No
“But, Hartnett is bullish…” (maybe not on Crypto, but who cares) and look at these #Quad4 Crypto Crash Risk Ranges:
A) The Maestro (MSTR) = $159-296
B) The COIN = $45-77
Yep, from yesterday’s close there is only -45% and -41% of IMMEDIATE-TERM TRADE downside in my Risk Ranges in MSTR and COIN.
#NoWorries
And while we’re still seeing some panic-stricken and weak-handed-hedgie short covering in #Quad4 Crash stocks like those, we are once again presented with our almost monthly opportunity to SELL STOCKS NOW.
Imagine you didn’t SELL Italy (EWI) on every bounce to lower-highs? That stock market (which uniquely American Long/Short hedge funds are not short in size like we are) is down another -1.6% this morning to -4.5% in the last month.
From here (until I update you next month), SPY only has 13.5:1 downside (in its Risk Range). I’m not short that though. I like shorting the Russell (IWM) better. It’s immediate-term TRADE downside to upside ratio is 13.8:1.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 2.85-3.12% (bullish)
UST 2yr Yield 2.97-3.29% (bullish)
High Yield (HYG) 72.92-76.25 (bearish)
SPX 3 (bearish)
NASDAQ 11,008-11,923 (bearish)
RUT 1 (bearish)
Shanghai Comp 3 (neutral)
DAX 12,412-13,339 (bearish)
VIX 23.24-29.80 (bullish)
USD 106.02-108.85 (bullish)
Oil (WTI) 92.13-104.16 (bearish)
Nat Gas 5.60-7.97 (neutral)
Gold 1 (bearish)
Copper 3.10-3.52 (bearish)
NFLX 162-218 (bearish)
TSLA 651-766 (bearish)
Bitcoin 18,160-24,122 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
