“The only easy day was yesterday.”
-Admiral McRaven
Looking back at what moved up/down in Macro Markets yesterday is easy. Having a decision-making #process to setup for what’s going to happen today, tomorrow, and into another month-end markup (or not), not so much.
McRaven’s quote comes from an excellent #behavorial book I’ve been citing: The Wisdom Of The Bullfrog – Leadership Made Simple (But Not Easy).
“It’s simple”, he says (but not easy)… “you are not entitled to anything but more hard work. Attack each day as though it were critical to the organization’s success” (p54). Yep that’s how we roll here at Hedgeye.
Back to the Global Macro Grind…
Is it “easy” for me to be Long Bitcoin (IBIT) going “moon” this morning? A: no. But it’s simple.
We’re the Independent Research team that helped you unearth Sam Bankman Fraud and a Crypto Crash (in 2022) that was for the ages. This is a young “Asset Class” that is laden with fraudsters and lazer-eyed muppets…
Yet, it’s easy to be long of it, until my #VASP (Volatility Adjusted Signaling Process) signals to get out!
Building that dispassionate risk management tool into my #process wasn’t easy either. But it was designed to simplify the complexity of human behavior that is being perpetuated by market manipulation and The Machine’s Flow.
You know you can be Long A Bubble, eh?
As you can see in today’s Chart Of The Day (slide 47 of the current Q1 2024 Macro Themes Deck), if you have a rules-based exit #process, this is what “Exit Execution” looks like (in risk managing any Asset Allocation or position):
A) Today, with Bitcoin “mooning” towards the TRR (Top-end of my Risk Range™ Signal), I’ll sell-SOME
= Partial Gain Booked, Exposure Maintained
B) If/when we see a correction towards the LRR (Low-end of my Risk Range™ Signal), I’ll buy-SOME
= That’s what we did in Portfolio Solutions late last week
C) If/when we register LHs (lower-highs) and/or an immediate-term TRADE breakdown, we don’t buy
= we wait and watch for a potential TREND breakdown (where we’d sell all, then look to short it)
No, that’s not a chapter in “Market Wizards” or whatever you think you’re going to read in order to play the modern day Game against both non-rules-based meme chasers and The Machine.
It’s in the Early Look.
If you don’t want to play The Game that way, as the great MJ said, “don’t play that way.” I do. I love The Game and trying my best to employ new mathematical (rules-based) tools to evolve alongside it.
Yesterday saw another broadening of what we call the Squeeze Baskets (built by Goldman):
A) Bitcoin Sensitive Equity Basket went “moon!” on the Perma Crypto Bears at +16.4% ON THE DAY
B) Liquid Most Short Basket got squeezed for a +4.1% day!
C) Recent IPO Basket ramped +2.5% on the day
Given that the beloved SPY Monkey was DOWN on the day (-0.4% was actually the worst Monday for SPY since June), there was an epic level of alpha printed by the Broadening, Squeezing, & Mooning of it all!
‘Oh but KM, you were short Bitcoin until OCT of 2023’…
Yep, may my non-laser-eyed god have mercy on me! As you can see in the Chart of The Day, I was, on balance short plenty of frauds from their Moon-Pump-Dump Cycle Peak in late 2021, however.
While the only easy day to see what happened in hindsight remains yesterday, #HedgeyeNation Home Gamers have been onto the next since, and bought the damn dip in IPO alongside IWO last week too.
Our new Asset Allocation to US IPOs (ticker = IPO) was +3.1% for us yesterday, beating Goldman’s basket.
What else is big, widely held (and/or widely shorted) that’s signaling to go the other way? A: maybe GOOGL?:
A) GOOGL is now signaling LHs (lower-highs) and an immediate-term TRADE breakdown
B) GOOGL also sliced through @Hedgeye TREND Signal Support of $142 yesterday
C) If it holds below TRADE and TREND #VASP Signal Supports today, it’s Bearish TREND
Why? I don’t really care why. It’s just math. And the fractal math implies a RISING probability that we just went from Mag5 to Mag4, in a day.
That means I should keep booking gains in anything I’m Long (we have 30 Core Asset Allocations in Portfolio Solutions alongside IBIT right now) if/when it’s approaching the TRRs (Top-End of Risk Ranges).
I’m not entitled to booking gains in this good world. I am entitled to doing the work that I just showed you. And I’m going to attack each day assuming the same discipline and process.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 4.18-4.37% (bullish)
UST 2yr Yield 4.50-4.75% (bullish)
SPX 4 (bullish)
NASDAQ 15,600-16,151 (bullish)
RUT 1 (neutral)
Tech (XLK) 200-209 (bullish)
Insurance (IAK) 107.66-112.34 (bullish)
S&P Momentum (SPMO) 72.84-77.52 (bullish)
Healthcare (PINK) 29.19-30.76 (bullish)
VIX 13.03-15.85 (bullish)
USD 103.46-104.84 (bullish)
Oil (WTI) 76.07-79.07 (bullish)
Copper 3.68-3.97 (bullish)
MSFT 400-416 (bullish)
AAPL 178-186 (bearish)
AMZN 167-178 (bullish)
META 458-494 (bullish)
GOOGL 135-144 (neutral)
TSLA 182-206 (bearish)
NVDA 728-820 (bullish)
Bitcoin 50,738-58,375 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
