“Was it a random guess, or did you do it based on knowledge?”
- Callie McCullough
That’s what my 10 year old daughter asked me after I explained the bad day I had in the p.a. during our family dinner last night…
Explaining that both losses and mistakes A) happen and that B) we, as members of the McCullough family, are going to be 100% transparent and accountable to those mistakes… are some of the most important lessons I can teach my 4 children.
“Well, Dad, how much money did you actually lose?” -Jack (12 years old). Well, buddy, enough to know that you’re doing the dishes tonight because I need to get back to work. Our family doesn’t beg for bailouts.
Back to the Global Macro Grind…
And no matter what I did yesterday, here I am today. God willing, I’ll have 2 feet on the floor at the top of the risk management morning tomorrow too. Onto the next play. I’m #NotDeadYet.
To keep this tight and to the point, here are my Top 3 Things in my pre-game notebook this morning:
- RUSSELL – after making plenty shorting IWM the 10x prior in FEB-APR, the last 2x I got smoked with IWM +10% in 3 days, taking its #crash to -21.8% from where The Cycle peaked. That’s one heck of a bear market bounce that now derives an immediate-term @Hedgeye Risk Range of 1 (i.e. -16.2% downside vs. +1.8% upside)
- GOLD – at least I didn’t suck on this one – Gold ramping +1% higher again this morning after a buy signal on red in Real-time Alerts yesterday with immediate-term upside to $1765/oz (Gold is +44% vs. Russell -22% across the Full Investing Cycle that started when US Growth peaked in Q3 of 2018); Gold Miners (GDX) continue to signal Bullish @Hedgeye TREND too
- OIL – “what’s the catalyst to drive the Russell and bank stocks lower?” A: economic gravity. From this month-end markup price in WTI of $17.29, there’s immediate-term downside of -55% to $7.74/barrel. Looks like the bond market gets this with UST 2yr Yield making a new cycle low at 0.18% this morning and HY Spreads way wide at +758bps over
For Callie, what else in the #process isn’t random this morning?
A) US Dollar – great spot to buy more at the low-end of my Risk Range for the US Dollar Index if it gets there today
B) FX – process had me waiting for the top-end of Risk Ranges in EUR, GBP, and AUD (looking to re-short those vs. USD)
C) US Equity Volatility (VIX) – still signaling immediate-term upside to 47.95, so shorting more SP500 equal weight (RSP)
D) NASDAQ (QQQ) joins US Healthcare (XLV) and Consumer Staples (XLP) as Bullish @Hedgeye TREND signals this AM
E) MSFT, AMZN, and TSLA are all confirming what have been Bullish @Hedgeye TRENDs in the daily Risk Range product
F) Industrials (XLI), Financials (XLF), and Regional Bank Stocks (KRE) move to the Top 3 Sector Style Shorts, in that order
G) Asian Equities, specifically Shanghai Comp and the KOSPI, signaled immediate-term TRADE #Overbought into month-end
H) German Equities, which I waited on and re-shorted yesterday, signaled TRADE #overbought within their Bearish TREND
I) Italian Sov Bond Risk remains this morning with the Italian 10yr Yield up another +3bps with German Yields down
J) US Treasury Bond market continues to signal Deep #Quad4, economically, with UST 2yr yield hitting a new cycle low
K) Gold loves Deep #Quad4 so it’s not clear why consensus doesn’t have FOMO for that, yet…
L) High Yield OAS Spread Risk is still wicked wide at +758 basis points over Treasuries
I’ll end on L because the Real L (my wife Laura) might login into my trading accounts this morning. She’ll know the answer to Jack’s question but won’t say a word to me about it. I greatly appreciate and respect her for that.
She knows how I roll. She signed up for this 14 years ago when I told her I was going to start Hedgeye and publish every move I make. She’s seen every short-term mistake a man can make. She’s also a believer that what I do has long-term meaning.
As I reminded Jack, Callie, Lucy, and Reese last night, the only true knowledge you’ll obtain in anything you love doing is by holding yourself accountable for your own mistakes. Once you learn from that, you’ll expect to win. It won’t be random.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.56-0.68% (bearish)
UST 2yr Yield 0.17-0.24% (bearish)
SPX 2 (bearish)
RUT 1 (bearish)
NASDAQ 8 (bullish)
Consumer Staples (XLP) 57.40-60.51 (bullish)
Healthcare (XLV) 95.45-102.43 (bullish)
Financials (XLF) 20.40-23.71 (bearish)
Shanghai Comp 2 (bearish)
DAX 10105-11203 (bearish)
VIX 29.71-47.95 (bullish)
USD 99.06-100.97 (bullish)
EUR/USD 1.07-1.09 (bearish)
GBP/USD 1.22-1.25 (bearish)
Oil (WTI) 7.74-20.51 (bearish)
Nat Gas 1.65-2.05 (bearish)
Gold 1689--1765 (bullish)
Copper 2.24-2.40 (bearish)
MSFT 167-190 (bullish)
AMZN 2311-2435 (bullish)
TSLA 674-876 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
