“The Americans would be less dangerous if they had a regular army.”
- British General Haldimand, 1776
You know that I go both ways, right?
Having an objective, data-driven, risk management #process means what it means.
Inside every immediate-term OODA (Observe, Orient, Decide, Act) Loop, I do what the volatility of volatility tells me to do. I don’t do what a regular linear Econ or Old Wall “strategist” does.
Back to the Global Macro Grind…
As both the VIX (SP500 Volatility) and VXN (NASDAQ Volatility) continued to break-down through critical @Hedgeye TREND support levels yesterday, the beauties of #Quad3 in Q3 ramped higher, and higher, and higher.
No, those weren’t the bank stocks (Financials, XLF, were down -0.5% on the day). They actually weren’t the Russell 2000 (IWM) stahks! or 8 of 11 SP500 Sector Styles that closed DOWN on a SPY UP +0.8% day either.
They were big macro exposures we own with the USA in #Quad3 and China in #Quad1:
A) Tech Stocks (XLK +2.6% on the day)
B) Gold Mining Stocks (GDX +2.7% on the day)
C) Chinese Stocks (KBA +2.5% on the day)
D) Rare Earths (RMEX +4.1% on the day)
E) Treasuries & Commodities
Rare Earths? Yeah, baby! While I personally saw truly tremendous and incredible “value” in buying all of the aforementioned things on red days, this type of Full Investing Cycle portfolio looks nothing like the Russell Value (IWN) ETF or something terrible like that.
I find value when both our Quads and Pods see ROC (rate of change) #accelerations in countries and companies, respectively.
If you have friends who are trialing what I do, they probably saw me signaling buy (in Real-Time Alerts) in:
A) Constellation Brands (STZ)
B) Tencent Music (TME) … and
C) Indonesian Stocks (IDX)
… yesterday too. What kind of a combo of cocktails, tunes, and Asian Value is that? Well I really don’t care what people want to call what I do this morning other than what I saw as buying opportunities.
Oh yes my “bearish” friends, no worries, with plenty of immediate-term TRADE #overbought signals out there this morning, the OODA Loops are going to be tight.
We’re only 10% of the way into US Earnings Season and there is plenty of alpha to be made both long and short.
Here’s your real-time update on an allegedly “better than expected” set of EPS reports so far:
A) 49 of 500 SP500 companies have reported an aggregate year-over-year Earnings Depression of -20.5%
B) 18 of 66 Financials companies have reported an aggregate year-over-year Earnings Depression of -34.2%
C) 6 of 72 Industrials companies have reported an aggregate year-over-year Earnings Depression of -33.2%
Hearing that a profit depression (and maybe Elizabeth Warren being the next head of the US Treasury) is the next catalyst for a US Earnings and Jobs boom by Q4 of 2020?
They (consensus V-Shape storytellers) better hope and pray for more #vaccine headlines instead of that.
Btw, did you know that IBM, who had “better than expected earnings” last night, has beat the Old Wall’s beaten down expectations in 20 of the last 20 quarters? Must have been a stock pick for the ages! lol
Whether it’s with the “EU Stimulus” headlines this morning or Tesla (TSLA) ramping to a new bubbled up high of $1643/share yesterday, you have to find time to smile about everything that’s going on out there right now.
As long as the VIX and VXN are under 26 and 33, respectively, I don’t see why #Quad3 Long positions in the NASDAQ and Gold can’t ramp to 12,000 and $2000/oz, respectively (Old Wall media loves the big round number “price targets”, eh?).
For bears on both GLD and QQQ, nothing is more dangerous than Americans chasing those momentum charts!
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.59-0.67% (bearish)
SPX 3131-3274 (bullish)
RUT 1 (bearish)
NASDAQ 10,335-10,855 (bullish)
Tech (XLK) 105.07-110.55 (bullish)
Financials (XLF) 22.32-24.63 (bearish)
Shanghai Comp 3184-3529 (bullish)
VIX 23.61-32.44 (bearish)
USD 95.60-96.84 (bearish)
Oil (WTI) 39.11-41.93 (bullish)
Gold 1 (bullish)
Copper 2.81-2.99 (bullish)
MSFT 202-218 (bullish)
AAPL 376-397 (bullish)
AMZN 2 (bullish)
GOOGL 1 (bullish)
TSLA 1 (bullish)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
