“Every obstacle is unique to us. But the responses they elicit are the same: Fear. Frustration. Confusion.”
- Ryan Holiday
That’s if you’re not playing The Game the right way. Those are very typical human responses to short-term market moves. In 23 years of trading, I’ve never seen so many players on tilt. Especially in a #Quad4 Bear Market, that is not how to play The Game.
Good news: many of you are able to fade your feelings. You are getting better and better at covering on red and selling more aggressively (FXE, HYG, IWM, EWQ, etc.) on green. As Ryan Holiday reminds us in The Obstacle Is The Way:
“Not everyone is paralyzed. We watch in awe as some seem to turn those very obstacles (#Quad4 Recessions), which stymie us, into launching pads” (and Long/Short gains). “What do these people have that we lack? It’s simple: a method and a framework.”
Back to the Global Macro Grind…
Method. Framework. #Process.
Execute.
If you’re a ball of emotion after a 2-day bear market rally off of immediate-term TRADE #oversold lows, you need to #GetBetter and execute at both the TOP and LOW end of the Risk Range™ Signals.
Q: Why was the USD down for the last 3 days?
A: Because it went up.
Q: Why were STAH-ks! And High Yield (HYG) up for the last 2 days?
A: Because they went down.
Oh, you thought that maybe there was a “Fed Pivot” or…. “everything was priced in”… or …
Stop it.
On the latest Fed narrative, the short-end of the UST Yield Curve (i.e. 2yr Yield) just went straight UP +10 basis points in the last 24 hours. Any narrative about “Australia” was thwarted by New Zealand’s central bank raising by 50 basis points overnight.
Q: What stocks led another uniquely American FOMO (Cramer types) and panic/performance stricken (Hedgies) bear market rally?
- Bitcoin Sensitive (Equity) Basket (with names like COIN, MSTR, etc.) got squeezed for a +8.0% move
- GS PROFITLESS Tech Basket ramped +7.5%
- GS Most Rolling Short Basket was +6.6% on the day (vs. SPY +3.1%)
Again? Really? Do those who live in either fear or frustration (Davey Day Trader) really want to buy those bubbles again?
How about Elon’s Tales or Credit Suisse’s Late Credit Cycle Implosion? Is it all “priced” in?
A) TSLA continues to signal Bearish/Crash TREND @Hedgeye with a refreshed Risk Range™ Signal = $237-271
B) CS (Credit Suisse) has a refreshed Risk Range™ Signal = $3.33-4.68
So Elon has to pay $44 BILLION in The Mother of All Bubbles Val for TWTR and my ex-employer (I was at CS in 1) only has immediate-term downside of -26%. All good brothers and sisters of the Demark signals and charts! All good.
In other non-fictional narrative news, another Widely Held GROWTH Exposure (AMZN) just popped a “corporate hiring freeze” on the tape. I wonder what that could be all about? Maybe The Cycle? Hearing Bezos knows about 4 Straight QUAD FOURS too…
Check your emotions at the door. They have no place in your process other than fading them. And stay data-dependent, my friends.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets:
UST 30yr Yield 3.54-3.90% (bullish)
UST 10yr Yield 3.51-4.00% (bullish)
UST 2yr Yield 3.95-4.36% (bullish)
High Yield (HYG) 70.01-73.68 (bearish)
SPX 3 (bearish)
NASDAQ 10,508-11,251 (bearish)
RUT 1 (bearish)
Tech (XLK) 118-127 (bearish)
Utilities (XLU) 64.55-70.07 (bearish)
DAX 11,814-12,694 (bearish)
VIX 27.36-33.95 (bullish)
USD 109.71-114.96 (bullish)
EUR/USD 0.952-0.999 (bearish)
GBP/USD 1.053-1.148 (bearish)
Oil (WTI) 75.35-87.11 (bearish)
Nat Gas 6.27-7.25 (bearish)
Gold 1 (bearish)
Copper 3.21-3.51 (bearish)
TSLA 237-271 (bearish)
Bitcoin 18,224-20,448 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
