“You have to find your why (and it can’t be fame or money).”
-Chris Bosh
That’s “Letter 2” Bosh wrote in Letters To A Young Athlete. This book isn’t just for your teenagers. Especially if you really want to play this game at the highest level, Bosh has important questions for you.
“What was I doing this for? Could I see beyond the next game, the next season, and really think about the role I wanted basketball to play in my life?” (pg 29).
Why do you get up so early? Why do you put in so many hours? Do you really want to be as deliberate and disciplined as you need to be in order to execute across the Full Investing Cycle?
Back to the Global Macro Grind…
Yesterday was a good day. Instead of being the Macro Tourist or Chart Chaser who went long during last week’s 2.5 HOUR bear market rally in US stocks, we faded it and executed on our process. It was the US stock market’s 5th down day in 6.
For those of you who go both ways, it wasn’t just a good day for our Long/Short Books, it was a good day to have not chased the recent move in bonds. Never forget this Letter (from me): I shall not chase Moving Monkeys, fame, or fire trucks.
All of the Top Questions in the Macro Show Queue had to do with doing the opposite of what I coach:
- Do we buy TLT here?
- Isn’t SPY breaking out?
- Isn’t the US Dollar breaking down?
ALL of the answers to those questions are on my Pre Game Pin Sheet. If you’ve never played golf with a pin sheet and/or studied the course, you have chosen to NOT play that game at the highest level too.
For those of you who are new to the Early Look and/or my Full Investing Cycle #process:
A) If the Risk Ranges (pin sheet) says Bearish TREND, it means its Bearish TREND
B) If the Risk Ranges (pin sheet) says Bullish TREND, it means its Bullish TREND
C) If the Risk Ranges (pin sheet) says Neutral TREND, its means its Neutral TREND
Using US Treasury Bond Yields, here are 3 examples this morning:
A) UST 2yr Yield was straight up off the low-end of my Risk Range yesterday and remains Bullish TREND
B) UST 10yr Yield was straight up off the low-end of my Range yesterday and is back to Neutral TREND
C) UST 30yr Yield bounced less than 2s and 10s and remains Bearish TREND (i.e. below 3.68% TREND)
“Neutral” means something ticked below or above the prior TREND Signal in my #VASP (Volatility Adjusted Signaling Process). The UST 10yr Yield is a recent example of that. It got below 3.58% TREND support for 2 days and is right at TREND today.
So what do I do with that? Let’s start with another Letter (from me) about what NOT to do:
- I never buy anything when it’s at the TOP-end of my Risk Range (i.e. where TLT was prior to yesterday)
- I never chase something that’s Bullish TREND never mind Bearish TREND at the TOP-end of my range (SPY)
- I never confuse an immediate-term TRADE breakdown with a Full Investing Cycle TREND (US Dollar)
So, again, the answers to those Top Questions in The Queue are already answered BEFORE the opening bell started yesterday’s game. If you have Old Wall baggage and don’t quite get that yet, I empathize with you. But you need to change.
Or you don’t. Remember, “you have to find your why.” How I play The Game is NOT for everyone.
If it was, more people would be winning in a down market this year. If it was, far less people would think a 50 or 200 Day Moving Monkey is “signal.” We play The Game differently. That is why we win when many Old Wall Tourists lose.
Back to the US Dollar with more specifics on the mathematically derived levels that matter:
A) Immediate-term TRADE resistance (was support) = 105.96
B) Intermediate-term TREND support (held as it has for all of 2022) = 103.15
Things “break” TRADE support and resistance much more frequently than intermediate-term Full Investing Cycle TRENDs do. Why else would I have invented the TRADE/TREND/TAIL risk management process?
While what just happened to the UST 10yr Yield might be the beginning of what I call a Bullish to Bearish Phase Transition (i.e. when BOTH TRADE and TREND Signals flip from Bullish to Bearish), I don’t’ see a hope on this side of Perma Bull hell that a Bearish to Bullish Phase Transition is happening to QQQ, Bitcoin, or Bankman-Fraud any time soon.
All that said, while I did add some Utes (XLU) to my Asset Allocation on red yesterday (in our Institutional & Macro Pro research you see my incremental adds/subtractions intraday), I didn’t buy Treasury Bonds or 2022 bag-holder TLTs.
I am in no rush to buy TLT. And I do not care what people think about that. I know my why. I can also afford my why. I found my why a long time ago. It’s called patience. I am in no rush to be “early” with a “call” on something like this.
From a Full Investing Cycle #process perspective, I’d rather be right on time or a little late.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.53-3.92% (bearish)
UST 10yr Yield 3.48-3.86% (neutral)
UST 2yr Yield 4.25-4.59% (bullish)
High Yield (HYG) 73.21-75.90 (bearish)
SPX 3 (bearish)
NASDAQ 10,820-11,511 (bearish)
RUT 1 (bearish)
Tech (XLK) 127-136 (bearish)
Consumer Staples (XLP) 74.34-77.53 (bullish)
Nikkei 27,699-28,475 (bullish)
VIX 18.99-25.41 (bullish)
USD 104.11-108.68 (bullish)
Oil (WTI) 75.06-82.40 (bearish)
Nat Gas 5.28-6.95 (bearish)
Gold 1 (bullish)
Silver 20.35-23.45 (bullish)
TSLA 164-199 (bearish)
Bitcoin 15,744-17,292 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
