“A leader must be keen and alert to what drives a decision, a plan of action.”
-Coach Bill Walsh
First, I want to thank you all for the kind compliments on the Early Look note I wrote on Friday of last week. The title had a simple question: “When Do You Get Out?” My answer is my #process. It’s built to simplify the complex.
In terms of my #VASP (Volatility Adjusted Signaling Process), most of what I’ve tested, tried, and ultimately built is designed to fade both my emotions and trying to be “smart.” Walsh goes onto explain the same:
“Few things are more painful for a leader than losing because your reasoning is faulty, your conclusions flawed, your logic skewed by emotions, pride, or arrogance.” –The Score Takes Care Of Itself (pg 82)
Back to the Global Macro Grind…
So… When Do You Buy The Damn Dips And Stay In?
A) When a market (or security’s) price is signaling Bullish on both my TRADE and TREND durations
B) When my Risk Range™ Signal is signaling a series of HLs and HHs
*HLs = Higher-Lows, HHs = Higher-Highs
Those are the best dips to buy. Less good ones have the following Similar Set:
A) Bullish TRADE and TREND … but with
B) HLs and LHs (Lower-Highs) in the Risk Range™ Signal
Recent examples of those have been our Asset Allocations to both India (INDA) and Bitcoin (IBIT).
That’s why you saw those positions fall towards the bottom of my Long Only Asset Allocation Model (see our Portfolio Solutions product for daily re-ranked position by SIZE) and others (like QQQ) rise back towards the top.
With time and space, The Setup (HLs and LHs) either resolves itself in:
A) A #GetOut Signal (i.e. a Bullish to Bearish TREND breakdown)… or
B) A Consolidation Signal
Both INDA and IBIT resolved to the upside this morning with +1.5% and +2.5% ramps with the TRRs (Top-end of the Risk Range™ Signals) moving higher, faster (as volatility breaks down).
While I used to “care” if I “missed” moves (like I just did in INDA today because I wasn’t adding to the position on the way down and it’s still at my MIN 2% Asset Allocation for Equity positions), I don’t feel anything about it anymore.
You saw me adding to Bitcoin (IBIT) yesterday because my #VASP Signal on it changed. I don’t “feel” anything about that either today. The Receiver (of my hard-earned capital) was wide open, so I just threw IBIT the ball.
If I was able to analyze YOUR in-Game emotions, I could help you a LOT with this, but:
A) That would probably drive me crazy
B) And I’m still working on me, who doesn’t want to do crazy!
So work on yourself. This is all about YOU and your decision-making #process, don’t forget.
While the INDA and IBIT examples are very short-term in-Game examples and observations from this morning, the intermediate-term TREND of BROADENING Local (US Equity) and Global Equity rally remains obvious.
In our most recent Q2 Macro Themes deck, we called it Global #Quad2.
Remember the time we shorted the Russell 2000 MANY times (at LHs within its Bearish TREND) throughout the 2022-2023 rolling Bear Market with Russell 2000 Earnings entering a #depression? I do.
Remember WHEN my #VASP went Long the Russell 2000 Growth (IWO)? I do. It was on FEB 21, 2024.
This is why your feedback on our new Portfolio Solutions product has been so positive. Just like Real-Time (Coaching) Alerts, every single Asset Allocation decision I make is #timestamped.
Does transparency mean perpetual victory? Ha! No. But you do get to see how consistent and disciplined I am at executing on my Rules-Based risk management process.
When our “view” was for a #Quad2 Broadening of the US Stock Market rally (a “call” many Perma Bull pundits got wrong for a LONG time) and 91% of stocks in SPY closed up an average +1.9% yesterday, we don’t “feel” anything.
We just made money for the right reasons, and we just say a broadening rally, it’s been.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 4.15-4.36% (bullish)
UST 2yr Yield 4.48-4.76% (bullish)
High Yield (HYG) 77.18-78.10 (bullish)
SPX 5135-5299 (bullish)
NASDAQ 16,101-16,597 (bullish)
RUT 2055-2134 (bullish)
Tech (XLK) 206-212 (bullish)
Insurance (IAK) 113.44-116.96 (bullish)
S&P Momentum (SPMO) 78.27-81.76 (bullish)
Healthcare (PINK) 29.83-31.11 (bullish)
Shanghai Comp 2 (bullish)
Nikkei 38,577-41,514 (bullish)
BSE Sensex (India) 71,901-74,251 (bullish)
DAX 17,829-18,544 (bullish)
VIX 12.25-14.47 (bearish)
USD 103.05-104.96 (bullish)
EUR/USD 1.076-1.092 (bearish)
Oil (WTI) 80.05-82.92 (bullish)
Nat Gas 1.62-1.88 (bearish)
Gold 2160-2232 (bullish)
Copper 3.95-4.16 (bullish)
Uranium (URA) 27.50-29.26 (bullish)
Bitcoin 62,705-72,953 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
