“We might restrict the only certainty in life to death, bearing in mind that its timing is not set.”
- Sima Dimitrijev
Some inexperienced short sellers and Hedge Fund managers died yesterday. If you have no experience and/or risk management #process to survive bear market squeezes, the timing of your death is not set, but almost certain!
In a decent #behavioral book titled Trial, Error, and Success, Dimitrijev was, playing off Benjamin Franklin’s famous 1789 quote that “in this world nothing can be said to be certain other than death and taxes.”
He then wrote, “in modern times, we know of some people who’ve successfully evaded taxes.” I thought that was funny. I think Elon is funny too. In the first hour of trading yesterday, 280,000 TSLA YOLO Call Options were bought. It’s a good thing “everyone is bearish.”
Back to the Global Macro Grind…
Some hedge fund guys hate me. They should know that I love that. Hating on how I play The Game isn’t going to improve theirs. If you do not know WHEN to cover your shorts on red, you’re not going to play The Game at the highest level.
‘Oh, yeah KM, you’re so good at this – you just say you covered after the move.’
Like all narratives that aren’t supported by any #timestamps or numbers, you can believe that or anything you need/want to believe. Even if you don’t watch my every Real-Time (Coaching) Alert (RTA), and have the panic-stricken-hedgie attention span of a squirrel:
A) The title of my Early Look on July 27 was “Covered-SOME”… and coming into yesterday
B) I’d covered EVERY single stock short in RTA other than PK which is currently -3.57% against me
‘But, but, you were hollering about FOUR QUAD FOURS!?!’
Yep. Since my IQ isn’t as high as some of these brilliant hedge fund guys, I have to rely on my EQ and experience as short seller. Especially in bear markets, in the very short-term you have to be able to do the opposite of your “fundamental” intermediate-term view.
So… other than having a solid day with my Go Anywhere Core #Quad4 LONGS in my Long Only MFO (Mucker Family Office) accounts:
- US Dollar (UUP)
- Taxable Munis (BAB)
- Japanese Equities (DXJ)
- Gold (GLD)
- Utilities (XLU)
- 7-10yr Treasuries (IEF)
- New Zealand Equities (ENZL)
- US Healthcare Stocks (PINK)
*Note: those are rank ordered by SIZE as of yesterday’s close and you can get my “re-ranked” Long Only account positioning in our Institutional Research and Macro Pro subscriptions, daily, from Jonesy Buds (he sends it out in a research note after I re-allocate). Reach out to for further access.
What happened out there in USA ONLY Long/Short Hedge Fund space?
A) Goldman’s “Most Short Basket” got squeezed for an epic +662 basis points on the day (vs. SPY +160 basis points)
B) Over the course of the last 2 days, that basket of Consensus Hedge Fund Shorts was up +970 basis points
That was only one of the biggest 2-day Short Squeezes in US Hedge Fund history – nothing to see here, folks.
The epic squeeze was fueled by a CNBC fake-news narrative that the Fed has “pivoted”… and, of course, got the “Retail Investors” right bullish and horned up “betting” like they were back when we were raging #Quad2 in Q2 of 2021 Bulls:
A) “Retail Call Buying” hit its highest level since 2021
B) That 280,000 yolo number for Elon’s Storytelling Stock wasn’t fake-news
‘So, KM, that sounds ridiculous – why didn’t you immediately short the bear market rally?’
A: #VASP
If you want to survive as a successful short seller for going on 23 years, you better have a Volatility Adjusted Signaling Process (VASP). Because when Vol of Vol moves, you better move. Where I grew up (Thunder Bay, Ontario) there are real bears that can eat you.
Not moving is also a way to survive a growling bear.
When I’m NOT moving (i.e. NOT sending you 5-10 SELL Signals in a window of an afternoon’s time) that’s a #VASP Signal. Additionally, I’ve upped my game in Real-Time Alerts to include what I call “Coaching Notes”:
A) One of those notes (in the morning when I was COVERING shorts) said the top-end of my SPX range shot up to 4201
B) Another (in the afternoon) said the top-end of my QQQ Risk Range shot up towards 327
Again, I’m not big-timing anyone here. If someone else in the Hedge Fund community wants to explain their entire process and show everyone what they are seeing, WHEN, and why, I welcome you with a giant Mucker Bear hug and LOTS of beers!
Another good example of NOT doing what I said I might do on The Macro Show was shorting GOOGL. Why?
A) Intraday the top-end of my Risk Range shot up towards 121
B) When I hear shots like that, I don’t stand up and beat my chest
I’m the son of a firefighter, don’t forget. I had a low SAT score, but I know WHEN to stop, drop, and roll.
It was actually a very good day on the SHORT side of our #Quad4 Commodity positions. If your entire short book isn’t TSLA and MSTR and you had Oil, Corn, Soybeans, Copper, etc. vs. Long Gold, you’re playing at a higher level than most.
Yesterday’s epic US stock squeeze changed nothing, fundamentally, about The Cycle. The Yield Curve’s inversion is at new Cycle Lows.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 10yr Yield 2.58-2.97% (bearish)
UST 2yr Yield 2.81-3.16% (bullish)
High Yield (HYG) 74.83-78.71 (bearish)
SPX 3 (bearish)
NASDAQ 11,406-12,799 (bearish)
RUT 1 (bearish)
Tech (XLK) 132-149 (bearish)
Utilities (XLU) 69.13-75.99 (bullish)
Healthcare (PINK) 25.03-26.16 (bullish)
Nikkei 27,265-28,107 (bullish)
VIX 21.01-26.69 (bullish)
USD 105.23-108.00 (bullish)
Oil (WTI) 92.03-99.40 (bearish)
Gold 1 (bullish)
Copper 3.21-3.58 (bearish)
GOOGL 102-121 (bearish)
Bitcoin 20,007-24,790 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
