“Among the men, the realization that the Endurance was really beset for good came very slowly.”
-Alfred Lansing
When does this bullish Global #Quad2 breakout in both Commodities and Equities end? A: when it ends.
Not unlike any professional who is trying to risk manage the non-linearity of all the emergent properties, including geopolitical risks, rate risks, etc., my #VASP (Volatility Adjusted Signaling Process) is built to “see” Phase Transitions.
What happened yesterday was not a Phase Transition. What happened to Ernest Shackleton’s ship was one. “What happened was simple enough… no force on earth could open up the ice again.” -Endurance, pg 37
Back to the Global Macro Grind…
When does our #VASP have us buy dips?
A) When a ticker that is signaling Bullish on both our TRADE and TREND durations is for sale… and
B) When that ticker is nearing the LRR (low-end of the Risk Range™ Signal)
Yes. For me, the “WHEN” part of the process is simple enough too.
What happens after we buy the damn dips:
A) We either make money … or
B) We lose money
If/WHEN my TRADE and TREND Signals break, then we lose more money. And we stop ourselves out.
So what are you going to do this morning?
A) Buy-more Commodity and Inflation Exposures?
B) Buy-more India or US Growth (Equity) Exposures?
C) Buy/Sell based on what 2 political hacks (Kashkari and Goolsbee) are saying?
Again, for me, the answer is simple enough:
A) We DO NOT buy things at the TRR (top-end of the Risk Range™ Signal)
B) India was UP overnight, so the answer is Buying-MORE US GROWTH at the LRR
C) LOL, are you kidding me?
Btw, that wasn’t a political comment about political hacks. That was an apolitical comment about analytical incompetence. These two guys are my age and I’ve watched them chase political fame during my entire career.
Back to what matters this morning…
Since the only thing our community of power-users was doing on the bright green US Equity Market open yesterday was SELL and book-SOME gains, we’re right back in the cat-bird seat this morning.
‘Oh, sure cocky Keith – I’m sure you did.’ -Crusty Old Wall Guy
Oh yeah bud, all Confident Keith did was make sales, eh. He’s a frisky little hockey player that moves fast, eh. Anytime anything approaches the TRR (top-end of Risk Range™ Signal) he sells-SOME, eh.
In case you don’t get Real-Time (Coaching) Alerts and/or Portfolio Solutions, here’s the detail on that:
Keith's Commentary: "In the PA today, added UUP at my min. Sold all PFF and EPHE. Sold 100bps HYG. Sold 50bps QQQ, XLG, EWY, SPMO, PJP, IPO, ITB, EWM, EWD, IBIT, ETHE, BLOK. Bought 50bps KBWP."
‘Cool. Thanks, Keith.’ -Cool #HedgeyeNation Gal
See that stealth addition of US Dollar Exposure (UUP) when it was on sale yesterday?
Yeah you did. With all of the panic-attack put buying (hedge funds) and systematics/quants trying to keep up with US Equity Options dealers selling SPY during the Negative Gamma Flip… NOTHING happened in FX or RATES markets:
A) USD is moving +/- 0.1% this morning and continues to signal Bullish on both TRADE and TREND
B) UST 2s (Short-end) and UST 10s (Long-end) have seen NO change in Risk Range™ Signal
‘But, but… Goolsbee mentioned he’s on a Golden Road to Oz… and Kashkari gave The Judge the crazy eye…’
We don’t care about what irrelevant people say or “feel” about markets. We care about what our #VASP is signaling in particular short-term windows of what Jim Gatheral coined (in The Volatility Surface) “Clock Time.”
As you can see in our Content Partner, Tier1 Alpha’s, Chart of The Day:
A) Super-short-dated Equity Vol Term Structure ramped, big time, into today’s Macro Tourist event
B) This is the 3rd time we’ve observed this panic-attack (put buying and SPX selling) in 2024
The other 2x, of course, were on NVDA Earnings day and on the day before the last CPI report.
If you’ve been executing alongside me for the whole ride, you know we made a pile both of those times by fading the short-term emotion of the crowd.
Will we make money buying XLG, SPMO, QQQ, etc. again this time? A: we’ll see.
Immediate-term Risk Range™ Signal with @Hedgeye TREND signal in brackets
UST 10yr Yield 4.19-4.42% (bullish)
UST 2yr Yield 4.51-4.76% (bullish)
High Yield (HYG) 76.66-77.51 (bullish)
SPX 5125-5284 (bullish)
NASDAQ 16,001-16,550 (bullish)
RUT 2032-2113 (neutral)
Tech (XLK) 202-211 (bullish)
Insurance (IAK) 114.13-117.81 (bullish)
S&P Momentum (SPMO) 78.62-81.13 (bullish)
Healthcare (PINK) 29.69-31.05 (bullish)
BSE Sensex (India) 72,050-74,492 (bullish)
DAX 18,074-18,511 (bullish)
VIX 12.58-16.85 (neutral)
USD 103.74-104.96 (bullish)
Oil (WTI) 81.27-87.41 (bullish)
Gold 2185-2346 (bullish)
Copper 4.00-4.26 (bullish)
Silver (SLV) 25.30-27.50 (bullish)
MSFT 415-429 (bullish)
AAPL 165-174 (bearish)
AMZN 176-183 (bullish)
GOOGL 146-157 (bullish)
TSLA 162-180 (bearish)
NVDA 851-960 (bullish)
Bitcoin 64,503-72,709 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
