“To do this, I have to show them – not tell them – what I am teaching them works.”
-Rickson Gracie
In the final chapter of one of the best #behavioral books I’ve ever read: Breathe, A Life In Flow, Gracie explains the challenges of becoming a coach and mentor. This is where his experience really resonated with mine.
“One of the biggest challenges in coaching seminars is managing egos. People communicate who they are, especially in martial arts, by the way they present themselves to me. The overwhelming majority of students are incredibly gracious and grateful for the opportunity to learn. Those with humility and curiosity are the easiest to teach.”
“It is difficult to teach people to re-learn things they have been doing wrong for decades. With them, sometimes I can’t be nice or gentle: I have to stretch an arm or squeeze a neck to make my point. Big egos and closed minds usually come hand in hand.” (pg 233)
Back to the Global Macro Grind…
Got Old Wall Baggage in your decision-making #process? How about ego and/or emotions? If you think you have a lot to learn, try being a proud (and emotional!) Irish Canadian from Thunder Bay who didn’t know anything about The Game 24 years ago.
If you want to learn how to play The Short Selling Game from me, I am here to help you learn it for yourself.
If it was “easy”, others would do it well, coach it, and publish their successes. This part of The Game is learned through making mistakes. If you’re underweight humility and overweight emotion and ego, you are going to get killed.
The entirety of my risk management #process is built to fade not only myself but the emotions of chasing crowds.
Recent Example (I’m old enough to remember June 15, 2023):
- SPX ramped to a major lower-high (for The Cycle) to close at 4425
- Our only Core US Index Short (Russell 2000) closed at 1889
- 1.8 MILLION SPX Calls traded that day – that was an ATH
ATH = All-time High. The 2nd and 3rd highest level prior were on FEB 2, 2023 and NOV 5, 2021.
None of that should be new news to you this morning. I wrote about it on June 16th, trying to explain the relationship between short-term Gamma Squeezes via a manipulated US Options Market and The Cycle (hint: there is no relationship!).
AFTER US Equity Beta (SPX) has been down for 5 of the last 6 trading days, it’s now June 27, 2023:
- SPX is -2.1% lower
- Russell 2000 is -3.5% lower
- And yesterday was one of the lightest US Listed Options trading days of the year
How did you do in the last 7 trading days since that particular/critical moment in Cycle Time?
- Everyone’s experience and results will be different
- Your goal shouldn’t be to whine and complain on days like June 15 – it should be to execute without emotion
- My experience was going from -13.3% Net Short that day to +8.4% Net Long this morning
You realize that any time you take the time to actually #PayAttention to what I say and do has nothing to do with me, right? It has to do with you! All I’m trying to do is SHOW you – not TELL you – that “what I am teaching them works.”
As for me, don’t forget that I do not share the goals of the big ego types that “called the SPY bottom” (but not tops).
My singular goal in building and coaching my Go Anywhere Full Investing Cycle #Process is to A) help you preserve & protect your hard-earned capital so that B) you can compound returns on that capital when the crowd is losing theirs.
On that score, the last 7 days have been profitable for me. If they weren’t for you, #GetBetter. We can always get better.
As for yesterday’s immediate-term @Hedgeye TRADE #oversold signals for US Equity Beta (SPX), here are some coaching points:
- There’s almost 3:1 upside vs. downside in the SPX daily Risk Range = 4
- If SPY is up +2.4% in the next 1-3 days into month/quarter-end markups, no one should be surprised (4433)
- SPY has a hefty implied volatility PREMIUM of +36% vs. 30-day realized vol this morning
Yes, the economic data (on both the Industrial and Consumption sides of the US economy) continues to #slow into the end of #Quad4 in Q2. Yes, you’re going to hear all about that during Q2 Earnings Season that starts in t-minus 3 weeks.
But no, my Net Long positioning today has nothing to do with that. It has everything to do with executing inside of the immediate-term TRADE OODA Loop (Observe, Orient, Decide, and Act) that macro markets presented me with yesterday.
Playing The Short Selling Game at the highest level is NEVER about Short-and-Hold. It’s always about moving, incrementally, across a Diversified Short Book of positions and maneuvers as PRICE, VOLUME, and VOLATILITY changes.
That’s it for today’s written coaching. I’ll see you LIVE on The Macro Show, breaking down The Setup in further detail.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 30yr Yield 3.76-3.93% (bearish)
UST 10yr Yield 3.63-3.86% (neutral)
UST 2yr Yield 4.56-4.81% (bullish)
High Yield (HYG) 73.95-75.00 (bearish)
SPX 4 (bearish)
NASDAQ 13,180-13,840 (bullish)
RUT 1 (bearish)
Tech (XLK) 165-175 (bullish)
Industrials (XLI) 100.87-105.52 (bearish)
Financials (XLF) 32.35-33.48 (bearish)
Defense (ITA) 112-117 (bullish)
Shanghai Comp 3145-3238 (bearish)
Nikkei 32,501-33,982 (bullish)
VIX 13.11-18.39 (neutral)
USD 101.55-103.71 (neutral)
EUR/USD 1.078-1.103 (neutral)
USD/YEN 140.14-144.75 (bullish)
Oil (WTI) 67.14-72.91 (bearish)
Nat Gas 2.26-2.97 (bullish)
Gold 1 (bullish)
Copper 3.70-3.95 (bearish)
Silver 22.05-24.65 (bullish)
MSFT 325-348 (bullish)
GOOGL 117-126 (bullish)
NVDA 401-445 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
