“No tool is omnicompetent. There is no such thing as a master-key that will unlock all doors.”
-Arnold Toynbee, A Study of History
Don’t tell that to the person who thinks the “bottom is in” on the Fed ringing the #cowbell (again) yesterday. It’s too bad that both PE Powell and the Vice Chair of the Fed can’t come out with dovish tweets, daily, to support asset prices.
The context of yesterday’s Counter @Hedgeye TREND bounces in the US stock market was that it came on the heels of registering immediate-term TRADE #oversold signals (low-end of Risk Range) in Tech, Energy, etc. on the day prior.
I’m not saying the Fed telling you they’re going to cut rates doesn’t matter (remember, our call was they’d do this). I’m reminding you that there is a Range (title of a new book the aforementioned quote came from) to risk manage now.
Back to the Global Macro Grind…
What is the Risk Range? If there’s one question I get most frequently from new subscribers who are trialing the risk management Hedgeye #Process, that is it.
A) What it is not is an Old Wall Technician’s “levels” of “support” and “resistance”
B) It’s a dynamic & daily probable range of prices that I use to make decisions
When my Risk Ranges are contextualized with:
A) My TRADE, TREND, and TAIL signal levels
B) Our 4 Quadrant Research #Process
Over time, I just make better decisions than a clueless version of a market Mucker would have 15-20 years ago. Rather than making emotional decisions (selling low and covering high) I’m constantly using the #process to fade those feelings.
“Over time” means over the course of The Cycles that, God willing, I’m alive to risk manage in full (yes, they take time, and long-term investors get crushed if they disrespect them at the turns).
“So”… while it’s fun to send you short-term signals and be held accountable to each and every one of them (I challenge you all to try it in the fishbowl like I do!), the short-term Risk Range is really what I use to get the longer-term right.
Is the daily Risk Range always right?
Obviously not. Also, don’t forget that with every second, minute, hour, etc. of market PRICE/VOLUME/VOLATILITY changing, the Risk Range changes. What I publish daily is a static range based on the prior day’s closing prices.
“So”… the only way to get insight into what I think intraday is through the lens of Real-Time Alerts.
That’s right. Real-Time Alerts isn’t my attempt to prove I can out-day-trade the bros out there. It’s actually my willingness to, again, be as transparent and accountable as I can be about my decision making #process, during the trading day.
Enough about that – here are 25 Risk Ranges vs. @Hedgeye TREND Signals contextualized with fundamental 4 Quadrant Research that have me Fading Fed #Cowbell (for now):
- UST 10yr Yield 2.03-2.35% (bearish) – Quad 4 in Q3 + Fed Rate Cuts pending = Long the Long end of the curve
- UST 2yr Yield 1.79-2.06% (bearish) – Quad 4 in Q3 + Fed Rate Cuts pending = Long the Short end of the curve
- SPX 2 (bearish) – Short in Quad 4 is signaling a lower-high within a Bearish @Hedgeye TREND
- RUT 1 (bearish) – Short in both Quad 3 and Quad 4 remains Bearish @Hedgeye TREND
- NASDAQ 7 (bearish) – Short in Quad 4 is signaling a lower-high within a Bearish @Hedgeye TREND
- Financials (XLF) 25.18-27.21 (bearish) – Short in Quad 3 and Quad 4 remains Bearish @Hedgeye TREND
- Utilities (XLU) 57.34-60.26 (bullish) – Long in Quad 3 and Quad 4 remains Bullish @Hedgeye TREND
- REITS (VNQ) 85.50-88.34 (bullish) – Long in Quad 3 and Quad 4 remains Bullish @Hedgeye TREND
- Shanghai Comp 2 (bearish) – Short China #Quad3 (bad PMI today), no bounce overnight = Bearish TREND
- Nikkei 202 (bearish) – Short Japan #Quad3 (bad data this am), bounce to lower-highs = Bearish TREND
- VIX 14.75-20.65 (bullish) – Long in USA Quad 4 remains Bullish @Hedgeye TREND
- USD 96.75-98.40 (bullish) – Long in USA Quad 4 remains Bullish @Hedgeye TREND (low-end of range today)
- GBP/USD 1.25-1.28 (bearish) – Short with UK in Quad 4 remains Bearish @Hedgeye TREND
- Oil (WTI) 51.20-56.99 (bearish) – Short in USA Quad 4, no #bounce this morning, down again instead
- Gold 1 (bullish) – Long in USA Quad 4, up another +0.7% this morning towards top-end of range
- Copper 2.61-2.71 (bearish) – Short in Quad 4, no #bounce this morning, remains Bearish @Hedgeye TREND
- AAPL 171.97-184.42 (bearish) – Short in Quad 4
- AMZN 1 (bearish) – Short in Quad 4
- FB 162-178 (bearish) – Short in Quad 4
- GOOGL 1026-1146 (bearish) –Short in Quad 4
- NFLX 331-357 (bearish) – Short in Quad 4 (and fundamentally our model has subscriber #GrowthSlowing)
- TSLA 173-206 (bearish) –Short in Quad 4 (and fundamentally our model has demand #slowing)
- Bitcoin 7 (bullish) – Long, for whatever reason right now, so I bought the damn dip (in my p.a.) yesterday
I go through this #process daily and manually with my machines and teammates.
Part of being a Mucker is that people like me accept that I am not the smartest intellect in The Game. I have to grind and find spots to make good decisions within Risk Ranges. Winning a lot of little bull/bear battles adds up, over time.
The same #process that had me cover all but 2 SHORTS in Real-Time Alerts PRIOR to PE Powell #Cowbell comments is the same data dependent and dispassionate #process that has me fading today’s green open.
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
