“The poor you will always have with you, and whenever you wish you can do good to them.”
- Jesus Christ
Taking a few sentences off from having to try to call the play by play on The Crash of 2020, I pray every morning and night for the poor people in this world who have absolutely nothing right now. I sincerely hope that the mother of all Wall Street bailouts helps them however it can.
Back to the Global Macro Grind…
I’m no socialist. I’m a capitalist who will give as much as I can with what I’ve been blessed to gain. I will not beg for bailout money or for the Fed to stand on the other side of my bad market strategies, positions, and decisions. I don’t think you should either. Others need it more than you do.
Now let’s get on with our bear market bounce day.
“Off the lows”, we are this morning. While “nibbling” on a lit barrel of oil would have paid off more than “stocks” will on the open this morning (Oil is +7%, SPY +5%), your lips would still have been seared shut doing so. No, I’m not chasing oil this morning.
I won’t be chasing “stocks” either. I’ll be selectively shorting them.
Since I’ve covered literally every US Equity Sector and Factor ETF, this morning presents the world of opportunity for this free-market capitalist. Yes, there are some of us still left in this world this morning. We’re all making money so far this year too.
What does “off the lows” mean?
A) The SP500 crashed -33.9% from its Full Employment Cycle high
B) The Russell 2000 crashed -42.4% from its Full Cycle Investing high
That means whoever got levered long at those highs needs to be up +51% or +72% (from here) in SPY or IWM terms, respectively, to get back to break-even. Where are the lower-highs?
A) SP500 could be up +11.1% today and nothing about #Quad4 will have changed
B) Russell 2000 could be +10.3% today and nothing about this Small Cap Factor Exposure Crash will have changed
Why +11.1% and +10.3%? Those are the top-ends of my @Hedgeye Risk Ranges.
Using the mathematical principles of fractal dimensions, that’s why I built the @Hedgeye Risk Range #process, don’t forget. I was looking for a way to check my emotional and hockey-head baggage at the door. I wanted a way to make market timing decisions dispassionately.
For a relatively passionate guy, you can imagine trusting the math wasn’t easy for me!
But there quite literally is no other way for me to make buy/sell decisions anymore. Yes, there are The Quads. In the intermediate-term, they provide me direction on @Hedgeye TRENDs. For immediate-term TRADEs, it’s all about the Risk Ranges.
Has that risk management #process worked?
Yep. In Real-Time Alerts, I’m 41 for my last 45 (i.e. the signals made money) since March the 6th. I’d be interested to compare those timestamps with anyone in the hedge fund industry. The last 3 weeks weren’t for rookies. You need to know how to ride a bear.
These timestamped realities aren’t meant to be cocky. No one would ever call me such a thing! They are purely meant to hold myself to a level of transparency and accountability that I see very little of in this profession.
Everyone has market opinions, but who is going to actually show you, in real-time, how to make money on them?
As for my opinions and theories on QE Infinity, Corporate Bailouts, and what this all means for both markets and the way of said “free market capitalism” in American life… who cares about my opinions? I don’t. I don’t do theories. I do what both the data and markets are doing.
What I care most about this morning is the math embedded in my risk management process. I especially feel for the poor, but I feel absolutely nothing about “stocks”, bonds, or Gold breaking out back to Bullish @Hedgeye TREND.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.64-1.23% (bearish)
UST 2yr Yield 0.26-0.57% (bearish)
SPX 2135-2486 (bearish)
RUT (bearish)
NASDAQ 6 (bearish)
Utilities (XLU) 43.55-53.40 (bearish)
REITS (VNQ) 51.21-67.93 (bearish)
Consumer Staples (XLP) 47.41-53.41 (bearish)
Tech (XLK) 66.26-77.08 (bearish)
Shanghai Comp 2 (bearish)
Nikkei 150 (bearish)
DAX 70 (bearish)
VIX 47.56-88.45 (bullish)
USD 98.25-105.42 (bullish)
EUR/USD 1.05-1.10 (bearish)
USD/YEN 103.33-113.01 (neutral)
GBP/USD 1.10-1.20 (bearish)
USD/CHF 0.95-0.99 (neutral)
Oil (WTI) 18.85-28.18 (bearish)
Nat Gas 1.45-1.80 (bearish)
Gold 1 (bullish)
Copper 2.00-2.32 (bearish)
AAPL 210.45-249.18 (bearish)
FB 134-158 (bearish)
GOOGL 1004-1137 (bearish)
TSLA 301-494 (bearish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
