“Lie to me by the moonlight. Do a fabulous story.”
- F. Scott Fitzgerald
Wall Street loves storytelling. Data-dependence, not so much…
It’s so much easier for so many more human beings to understand a bullish story than something like Quads and/or the volatility of volatility. “So”, as someone telling you a story about a stock likes to say, that’s my narrative on that.
Back to the Global Macro Grind…
The aforementioned quote comes from a short-story that F. Scott Fitzgerald wrote in the Roaring 1920s titled The Offshore Pirate. It’s a story about a woman whose boat was captured by pirates in Florida. Then she fell in love with the pirate.
In real life, at precisely the wrong time, lots of people fall in love with stocks too.
Only 1-month ago today, how many Hoodies and Hedgies could tell you a story about how it was “different this time” with the 5 stocks they all owned together. It was different alright – that was probably the most concentrated stock market bubble, ever.
And ever, as my fabulous storytelling has often reminded you, is a very long time…
Oh, and yes, the bubble that suckered people into selling it at the lows on Monday, bounced, big time. Then it started popping, again, when the VIX wouldn’t lie to us anymore yesterday morning. It happens.
VIX’s kissing sister (her name is VXN) wanted nothing to do with breaking down through @Hedgeye TREND support yesterday either. Instead, she rode #NazVol higher and closed just north of 37.
Let me tell you a story about VIX & VXN. They love pirates too.
And they do a fabulous job at reminding us why Captain Stock Picker drowns when a cluster of short-term equity market volatility becomes a trending Phase Transition.
But how many women really know this Particular Pirate, his proclivities, and how he operates?
How many people who love living on the coast of Florida, playing golf, and loving their stocks know what those 12 words mean? (cluster of short-term equity market volatility becomes a trending Phase Transition)
A: not enough.
An even lesser number of them have the faintest idea of The Pirate’s particular attraction when a Phase Transition in volatility is front-running his go-to-move towards #Quad4 Island. That’s when he’s got it nailed.
Enough about pirates vs. proctologists. Onto the next. It’s a great day to gross up your Long Gold position again. Why?
- This is Day 3 of the US Dollar probing the top-end of its @Hedgeye Risk Range
- This is Day 3 of Gold probing the low-end of its @Hedgeye Risk Range
- Gold Vol looks nothing like #NazVol – Gold Vol (GVZ) at 24-25 this morning is where you buy more Gold
Those are the easiest things for me to see this morning. They’re just quantitative signaling facts. The harder things for those who haven’t owned Gold, in size, for its Full Investing Cycle (i.e. since $1200/oz back in Q4 of 2018) to understand are:
A) The Quads
B) How Quads 3&4 have perpetuated Falling Real Yields
C) How real yields falling alongside a Devalued Dollar perpetuated MAGA Returns for Gold this year vs. SPY
On this debate that Mr. Market is having about the probability rising of #Quad4 in Q4, we’ll be breaking it down in data-driven detail during our Q4 Macro Themes presentation next Tuesday (ping for access).
That debate about a Phase Transition from #Quad3 to #Quad4 is really a story about going from LONG to SHORT Tech (XLK). All I’ve done so far is go from mucho Long NASDAQ, Tech, etc. in Q3 to out. I haven’t short it yet…
The bull case for Gold is that it does even better in #Quad4, especially if US Treasury Yields were to collapse to all-time lows. And, don’t tell anyone this, but if Gold doesn’t work, from here, I’ll introduce you all to a female pirate – her name is TINA.
In that fabulous story with Sisters VIX & VXN howling at the moon, there is no alternative to anything but Treasuries and Cash!
Immediate-term @Hedgeye Risk Range with TREND signal in brackets:
UST 10yr Yield 0.63-0.70% (bearish)
UST 2yr Yield 0.10-0.15% (bearish)
SPX 3 (bearish)
RUT 1 (bearish)
NASDAQ 10,520-11,056 (bearish)
Financials (XLF) 22.64-24.43 (bearish)
VIX 24.67-30.15 (bullish)
USD 92.42-94.71 (bearish)
EUR/USD 1.16-1.19 (bullish)
Gold 1 (bullish)
Silver 21.99-26.20 (bearish)
Copper 2.94-3.11 (bullish)
MSFT 196-209 (bearish)
AAPL 104-115 (neutral)
AMZN 2 (neutral)
FB 239-266 (bearish)
GOOGL 1 (bearish)
NFLX 452-494 (bearish)
TSLA 358-477 (neutral)
Best of luck out there today,
KM
Keith R. McCullough
Chief Executive Officer
