“You’re tired, yeah? Welcome to the club.”
-Chris Bosh
Bosh’s new book, Letters To A Young Athlete, definitely surprised me to the upside. The reason for that is simple: he tells the truth. Especially if you have teenage kids who are serious athletes, I highly recommend they read this book.
The truth about playing The Game at the highest level is that it’s a bloody grind. People often ask me, “don’t you get tired of waking up when you do.” Answer: Yes. But do I whine and complain about it? No. I just grind through it.
In a chapter Bosh called When You Ain’t Nothing But Tired: “That wave of exhaustion doesn’t care how much time is left on the clock. Once it gets its shoulders square and starts running downhill, it’s coming for you like Marshawn Lynch through the A-gap.”
Back to the Global Macro Grind…
Bull markets are obviously easier grinds than bear markets. In bears, you have to have another gear. You have to be mentally tougher. That’s what rising volatility is designed to do to your mind and body: exhaust you.
One of the easier things to do in a bear market is cover shorts on red. Especially in bear market bounces, it’s tougher (mentally) for most to be there, executing (selling) on green.
That’s what I was doing yesterday. You’re not reading some bull$hit sell-side “call”, I’ve #timestamped every move I’ve made (around 7,000 of them, long and short) since 2008. When you show your in-game-decision-making process, you have less to explain.
While Real-Time (Coaching) Alerts is NOT a portfolio, it does provide explicit color on pivots in my Long/Short Book.
In our Macro Pro subscription, I’ve also evolved the communication and transparency process to show what I am doing, daily, from a Long Only Asset Allocation perspective. I usually send all of those moves to the team by 11AM ET.
From last week’s bear market squeeze (i.e. Selling Opportunity last Friday when I started selling aggressively again – you know when a “SELL QQQ” RTA hits, I’m getting shorter), the positioning in my Long/Short Book looks like this week-over-week:
A) I went from -12.3% Net Short at Friday’s close … to
B) -2.8% Net Short post yesterday’s close
Why? Not because I’m “not as bearish.” It’s because I am disciplined.
If you want to be better than bad at Short Selling and/or even attempt to run Net Short (most hedge funds can’t and/or don’t), start with that. Discipline and execution matter a lot more than how smart you think your long/short ideas are.
You saw me cover that QQQ short in RTA (Real-Time Alerts) on red. In fact you saw me cover a ton of shorts and end my winning streak at 29 in a row yesterday. I booked a big -0.09% loss in my Copper Miners (COPX) short. That ended the streak.
No, I don’t frequently go on runs like that. And no, I’m not “bragging” about it. That’s just my score. If you’d like to see how bad I can be when I’m cold, look up all 7,000 of my #timestamps and enjoy.
The Copper Mining Short was what I call a COVER ALL on red. What does that mean and why ALL?
A) Covering ALL isn’t Covering-SOME (as I often say in RTA). Covering ALL means I’m completely #out
B) Why? I really don’t care why my #VASP Signals tell me to move, but I was getting Net Long Metals yesterday
What kind of metal you liking here, Mucker?
A) I’m still a big Motley Crew fan – I used to try to look like Vince Neil in high school. My jeans were black and tight!
B) I’m thinking Precious Metals: Gold (GLD), Gold Miners (GDX), and Platinum (PPLT) – should have bought SLV too
And that’s the other big takeaway from why my Net Short position may approach neutral AFTER market declines:
A) I have many more Core Asset Allocation LONGS than I’ve had all year (XLV, XLP, ITA, XOP, XLE, AMLP, etc.)… and
B) I like to whip it around, aggressively, on the SHORT Side of my book when US Equities are in The Chop Bucket
What’s The Chop Bucket, bro?
A) When front-month US Equity Volatility on SPX is in the 20-29 Risk Range… that’s when
B) Rookies and/or Narrative Tourist types get chopped up because they think every move is a new big TREND
That’s mainly why I went on a run for 29 points. The Chop Bucket gives me 2 days up, 1 day down, 1 day up, 2 days down.
Is it tiring? Heck, yeah. “You’re just tired. All the time. Bone-ass exhausted.” -Chris Bosh
But at least in my own mind, I know that’s when I can win. Many of the people I’m playing against are too tired and/or confused to keep executing at both the level and pace that The Game is currently being played.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.78-4.47% (bullish)
UST 10yr Yield 3.60-4.34% (bullish)
UST 2yr Yield 4.25-4.81% (bullish)
High Yield (HYG) 71.57-74.96 (bearish)
SPX 3 (bearish)
NASDAQ 10,007-11,404 (bearish)
RUT 1 (bearish)
Tech (XLK) 117-135 (bearish)
Energy (XLE) 88.43-95.44 (bullish)
Consumer Staples (XLP) 70.53-74.57 (bullish)
Healthcare (XLV) 131-135 (bullish) `
Shanghai Comp 2 (bearish)
VIX 22.35-27.65 (bullish)
USD 105.08-112.87 (bullish)
EUR/USD 0.975-1.043 (bearish)
Oil (WTI) 81.02-89.36 (bearish)
Gold 1 (bullish)
Copper 3.54-3.92 (bearish)
Bitcoin 14,705-18,724 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
