Below is a chart and brief excerpt from today's Early Look written by Hedgeye CEO Keith McCullough.
When something big (like Bearish USD) is signaling something new, other big things start to signal something new as well. For those who are one-way, perma-marketing certain asset classes, that critical and objective part of my process doesn’t work for them.
Gold, for example, should never be owned when Real Yields are rising. That’s why I was unpopular with the Gold Bug establishment in 2017 and into 2018 until my signal (and economic Quad) said it was buy Gold time back in Q4 of 2018.
Similarly, when The Signal (and economic Quad) agreed that the peak of the US economic and profit cycle was in (Q3 of 2018), we went bearish on Small Caps & Speculative Credit. Last week here’s what Gold did vs. the Russell 2000, in context of The Cycle:
Fortunately for all of you Full Cycle Investors, these are examples of dramatic #divergences that can’t be explained with a narrative that denies the solar system or The Cycle’s existence.