“I’ll begin to speak only when I’m certain what I’ll say isn’t better left unsaid.”

Many bullish things were tweeted (at me) and said (to me) following this bear market’s BIG LOWER-HIGH back on FEB 2. They had their “charts” and narratives… but I had my numbers, reminding you it was the best JAN for NASDAQ since JAN of 2001...

That wasn’t a bullish thing. Neither was SPY dropping -4.4% since that date and/or NASDAQ resuming its #Quad4 Crash at -28.4% from The Mother of All Bubble Peaks (Early Look on FEB 3rd was titled The Mother of All Bubbles Lives!).

Did you sell that day? As both Cato and historian Ryan Holiday reminds us in today’s Daily Stoic, to do this my way requires #process, preparation, and it “requires awareness… it requires us to stop and evaluate ourselves honestly. Can we do that?” (pg 62)

Risk Happens Slowly, Then... - gold cartoon 06.17.2016

Back to the Global Macro Grind…

If you can’t do that, #GetBetter. If you can’t read that, #GetBetter. Each and every waking hour of my work day I try to get better. The only way to do that is through constant self-reflection and evaluation of my mistakes.

Unlike most, large or small, I have to answer to every mistake I make, daily, on The Macro Show. The “top” voted questions are almost always anchoring on anxieties. I like that. I learn more from the #behavioral questions than I do answering them.

Yesterday, for example, it was all about Gold…

Then, Gold opened UP on the day. It’s flat this morning. Imagine I was still long something that I got #out of, right on time, like Energy? I’d have been hung from the rafters of the Fort William Gardens in Thunder Bay!

All good. Here’s your #Quad4 Demand Slowing update on Energy:

  1. Natural Gas (UNG) is down another -4.3% this morning, taking its crash to -80.1% from its #Quad3 Inflation Cycle Peak
  2. Oil (WTI) is down another -1.7% this morning, taking its #Quad4 Crash to -42.2% from its Inflation Cycle Peak
  3. Energy Stocks (XLE) and Utilities (XLU) are the 2 worst Sector Styles on the board here so far in 2023

I remain short of Energy in Oil & Gas Equity (XOP) terms. I’m also short Energy via country ETFs that I see very few Masters of The Short Covering (Higher) Hedge Fund Universe in: United Arab Emirates (UAE), Qatar (QAT), and Brazil (EWZ).

If you didn’t know that 2 of the Top 4 weights in EWZ are Petrobras (i.e. Oil) Equities, now you know.

What’s better than that? Being long the #1 holding in the EWZ against that short. Oh yeah, bud. I’m long the VALE, eh bud. That’s how we do the Long/Short thing buds.

Sorry, just back from Quebec City, eh!

The WHEN (you know, as in the timing) of the questions I get are awesome because they show me the tremendous opportunity for members of #HedgeyeNation to #GetBetter.

Back to Long Gold (yes, I currently have a 3.5% Long position in GLD, and I’m short a 2% position in Palladium (PALL) against part of it)… you know Palladium is down another -1.7% this morning and down -12.1% in the last month, eh?

Oh, enough KM, China is down today, wtf? Well, yes, it is down -0.5% the day AFTER Shanghai Composite Index made a new Cycle High… but India (INDA) is down more… and I’m short that. I’m going to be shorting more Pakistan (PAK) on the open too.

You know… when the VIX explodes from my ball-underwater-sub-VIX19 spot to 23… risk happens in most places, all at once, eh?

There’s so much to do out there, so much to see. If you’re not process-driven and disciplined in your Long/Short Portfolio Construction during Phase III of The Bear Market, I can see why you’d have the anxiety many did on FEB 2.

Moving along, here’s a list of particularly important callouts in my Go Anywhere Global Macro Notebook this morning:

  1. US Dollar Index is signaling a BIG HIGHER-LOW of $102.65 (in my Risk Range) after breaking out to Bullish TRADE
  2. USD continues to breakout vs. Yen post the BOJ being forced to CTRL+Print and buy another 400B JPY in Bonds yesterday
  3. German 10yr Yield is ramping to new Cycle Highs post inflation #accelerating to +8.7% in FEB
  4. UST 10yr Yield is signaling a BIG HIGHER-LOW at 3.62% (in my Risk Range) which is ABOVE TREND Signal Support of 3.60%
  5. Gold is flat A) despite points 1-4 and B) hyperventilation in the Queue

Then you have the #0DTE US Options Bubble:

A) Evidently The Game is played both ways there with > 502,000 SPY Puts trading on the 400 line yesterday
B) #2 on The Most Actives (options) Board were the #0DTE 399 SPY Puts at > 346k contracts

Then there are the Bear Market Baskets from my friends at GS:

A) Most Rolling Short basket (i.e. what got covered and squeezed higher into FEB 2) down -5.9% yesterday
B) Bitcoin Sensitive Equity and No-Profit Tech baskets got tagged for -4.8% and -4.0%, on the day, respectively

Then there’s the #Quad4 US Housing Recession that many opted to buy into in early FEB:

A) Home Depot (HD) comped negative for the 1st time in 12 years
B) Existing Home Sales crashed to -37% year-over-year… and that was the lowest level in 12 years

What was your #process like 12 years ago? How about 12 weeks ago? And 12 days ago? Are you a chaser or a fader? Are you a lover or a fighter? Away from Gold, there are so many questions for you to answer about for yourself before I answer your next one!

Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets

UST 30yr Yield 3.71-4.01% (bullish)
UST 10yr Yield 3.62-3.99% (bullish)
UST 2yr Yield 4.41-4.74% (bullish)
High Yield (HYG) 73.11-76.01 (bearish)         
SPX 3 (bearish)
NASDAQ 11,310-11,930 (bearish)
RUT 1 (bearish)
Tech (XLK) 134-142 (bearish)
Defense (ITA) 114-118 (bullish)
Utilities (XLU) 66.17-68.62 (bearish)
Gold Miners (GDX) 27.75-30.82 (neutral)                                              
Shanghai Comp 3 (bullish)
Nikkei 27,003-27,705 (bearish)
VIX 18.31-23.74 (bullish)
USD 102.65-104.66 (bullish)
USD/YEN 130.70-135.60 (bullish)
Oil (WTI) 74.26-79.41 (bearish)
Nat Gas 1.91-2.60 (bearish)
Gold 1 (bullish)

Best of luck out there today,

Keith R. McCullough
Chief Executive Officer

Risk Happens Slowly, Then... - chartofdayWed