“Boyd called this time-based-competition.”
- Chet Richards, on “The Mad Major”
“Feel” like you wanna #BuyStahks today? I bet. With the US Dollar under legit @Hedgeye TREND attack, if the SP500 closes and holds where US FOMO Futures are trading right now in the pre-market ramp, it will move back to Bullish @Hedgeye TREND too.
Is it signaling a broad based beginning to the next “bull market” or the mother of all head-fakes after an epic move? A: I don’t know. But I do know what I’m waiting and watching for. I have plenty of problems right now, but one of them isn’t being agile.
“Agility can be thought of as the output of Boyd’s philosophy of maneuver conflict… the essence of agility and applying Boyd’s ideas to competition is to keep one’s orientation well matched to the real world during times of ambiguity, confusion, and rapid change.”
- Chet Richards, Certain To Win, pg 30
Back to the Global Macro Grind…
I most certainly did not win yesterday. I run my own money and I got smoked. It doesn’t really happen in transparent/public real-time to many out there on the Street though. Some of the big boys and girls dial up their buddies at the Fed when it happens to them.
It is what it is. In the short-term, losing sucks but what sucks more is not having a #process that ensures you don’t keep losing over the intermediate to long-term. I’d rather die than beg for a Fed bailout of my Full Cycle Investing market mistakes.
Before the US Equity & Credit perma bulls dance around on my grave too much this morning (Chuck Prince would love a US stock market like this, eh?), just a friendly reminder that:
A) The Russell 2000 needs to be up +23% (from here) to get back to break-even with where I went bearish
B) The SP500 needs to be up +10% (from here) to get back to where I was calling for Deep #Quad4
All good. Onto the next. Game on.
Here’s how I summarized this morning’s short-term Boyd OODA (Observe, Orient, Decide, Act) Loops in my Top 3 Things note that goes out to premium Institutional subscribers daily by 6AM:
- SPY – took some time, but FOMO Futures have ramped above @Hedgeye TREND support of 3085 for the 1st time since the March #crash; to get this to hold up here (towards the top-end of my Risk Range), the powers that be need to suppress US Equity Volatility (VIX) below 26 and keep it there for longer than a New York looting minute
- USD - #1 driver of this relentless #BuyStahks move has been Down Dollar – the 15-day inverse correlation that The Machine is chomping on is now -0.92 between USD and SPY. It’s all one interconnected macro trade to me with USD threatening a long-standing Bullish @Hedgeye TREND reversal from the LOW end of its immediate-term Risk Range
- GOLD – after signaling overbought (alongside Gold Miners) in Real-time Alerts earlier this week is correcting towards the LOW end of its Risk Range and finally Treasuries are for sale again on the long-end of the curve with UST 10yr = 0.71. I’ll start buying more Treasuries (as I have every time the 10yr has hit 0.73% or higher) alongside Gold there
No doubt that the powers that be are super powerful – they’re way more established and powerful than I’ll ever want to be. I’m just a mucker, who has been grinding away for the last 20 years without needing to cheerlead the Fed for my Full Investing Cycle returns.
On that score, since all of my kids & retirement accounts are close to their all-time highs (with no drawdowns, yet, this year), selfishly, the most important thing I need to preserve and protect is that hard earned capital.
For me to lose that, that would mean losing the compounding returns I’ve had with my 2 largest Asset Allocations: Gold and Treasuries (across the curve). So I’m super aware about any shifting probability that the US Economy is or is not in what we call #Quad2 beyond July.
For those of you who don’t know what #Quad2 is, it’s basically the opposite of the Asset Allocation I have now:
- It’s when both real GROWTH and INFLATION are #accelerating, at the same time …
- That’s when I am short Gold and Treasuries (because Real Rates are rising, on a TRENDING basis)
- That’s also when I’m long Financials (XLF) and Industrials (XLI) vs. short Utilities (XLU)
For those of you who don’t have to chase daily, weekly, or monthly performance charts… take a deep breath here… and ask yourself if anything I just wrote in points 2 and 3 are signaling Bullish (or in the case of Utes, Bearish) @Hedgeye TREND.
Nope. While the SP500 may or may not hold onto its Bullish @Hedgeye TREND reversal here (remember, I have no position there so I really don’t care what beta does), both my fav US Equity Index Short (IWM) and Sector Short (XLF) remain definitive Bearish TRENDS…
Inasmuch as Gold and Treasuries remain definitive Bullish @Hedgeye TRENDs…
I know, I know. I’m too “long-term” for the FOMO crowd on these long-term cycle positions. It’s weird because Institutional Investors always tell me they’re “too big to move” as quickly as I do…
But most of the time, I’m not moving from my core Quad Asset Allocations at all. Their benchmarks are!
It’s been 1 year and going on 9 months that I’ve been more bullish than anyone in the history of anyone (since President Pump) on Gold and Treasuries. So if those of you “long-term investors” panicking right now don’t mind, I’ll take my sweet mucker time on those.
I’ll deal with this short-cycle time-based-competition of USD/SPY, etc. in the meantime.
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.63-0.73% (bearish)
SPX 2 (neutral)
RUT 1 (bearish)
NASDAQ 9 (bullish)
Healthcare (XLV) 98.30-103.70 (bullish)
Tech (XLK) 94.52-98.99 (bullish)
Utilities (XLU) 54.51-61.75 (bullish)
Financials (XLF) 21.06-24.81 (bearish)
VIX 26.04-34.19 (bullish)
USD 97.24-100.22 (neutral)
USD/YEN 107.10-108.92 (bullish)
Oil (WTI) 29.70-37.61 (bearish)
Gold 1 (bullish)
Bitcoin 8999-10,144 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
