“Half-blind, half-deaf… and chronically dazed.”
- Mark Sullivan 

That’s how American Journalist, Mark Sullivan, described the “state of the world after the Great War… some of what had occurred was a fundamental alteration from which we would never go back.” -Rainbow’s End, pg 19

Post an epic loss of human life during WWI, however, came what Neil Howe calls a generational “turning.” Will we have one of those just because many people want to turn the page post next week’s election?

From yesterday’s US stock market lows, maybe… But generational turnings take generations. And no matter what the latest central-market-planning narrative, The Cycle still cycles.

Fear #Overbought - 10.26.2020 stimulus on ventilator cartoon

Back to the Global Macro Grind…

From Friday’s immediate-term TRADE #overbought signals (in US Equities) to yesterday’s abrupt immediate-term TRADE #oversold signals, that’s what this regime (wrong Vol bucket!) of US market volatility does – it whips people around.

If you have no market-timing and/or risk management #process to sell high and buy/cover lower, that is…

Since the #Bitcoin “maximalists” (code for max long with no risk management of gross or net exposure) have reincarnated ye Olde Wall’s 1929 “buy and hold” marketing pitch with nasty and nameless hornets, I’ll salute them this morning with:

= immediate-term upside in the @Hedgeye Risk Range to $13,637 Bitcoin, in devalued US Dollars.

Yep, after trading around it, I’m still long #Bitcoin alongside my core Asset Allocation to Commodities with this morning’s Global Macro market signals siding with USA in #Quad3:

A) US Dollar Down after a 2-day Counter @Hedgeye TREND bounce
B) EUR/USD immediate-term upside in my Risk Range to $1.190
C) CRB Commodities Index signaling immediate-term TRADE #Oversold at 149

Those are just the most basic of cross-asset-class FX/Commodities signals. In US and Global Equity terms:

A) SPY signals immediate-term TRADE #oversold at 3380 with…
B) VIX signaling immediate-term TRADE #overbought at 33.66
C) Japanese and Chinese Equities not caring so much about anything American overnight

That’s right. Despite the bloodbath for those who were bathing in garbage stocks in the US on Friday, Japan’s Nikkei (we’re long EWJ) closed -0.04% overnight and China’s A-Shares closed UP +0.1% in Shanghai.

In order to express my aforementioned ABC’s of Down Dollar, Long Commodities, and Long China, here were my RTA’s (Real-time Alerts on red yesterday):

A) Bought China’s MSCI A-Shares ETF (KBA)
B) Bought Rare Earths US Equity Exposure (FVAC)
C) Bought Cannabis Commodity REIT Exposure (IIPR)

Yeah, I know. That’s the consensus Hedge Fund Hotel portfolio, eh? Nope. It’s part of Hedgeye Nation’s way to express China’s economy being in #Quad1 (i.e. Real Growth #Accelerating) and Down Dollar #Quad3 Stagflation in America.

Have Hoodie or Hedgie friends who are happy to chase charts on the way up but scared on yesterday’s way down? No worries, brothers and sisters of the risk management realm – fear was big time #overbought yesterday too:

A) Implied Volatility on SPY ballooned to a +52% PREMIUM vs. 30-day Realized Vol
B) Implied Volatility on Tech (XLK) mushroomed to a +42% PREMIUM vs. 30-day Realized Vol
C) Implied Volatility on MSFT ramped to a +42% PREMIUM vs. 30-day Realized Vol

If you’re asking for a friend what that means?

A) When big stuff like SPY and Tech selloff to the low-end of their Risk Ranges and …
B) Implied Vol DISCOUNTS shroom into big PREMIUMS…
C) That means Bulls are afraid and both Bulls/Bears are buying puts!

What’s extra-special about yesterday’s pre-election freak-out is the timing vis a vis Mr. Softie (MSFT) reporting his quarterly report today. Is it going to be what it better be to have had the NASDAQ at an all-time high at the end of AUG?

Or is it going to be like what our #Quad4 in Germany did to SAP yesterday?

To be crystal clear, if one of the most widely owned stocks in human history (MSFT) is down -20-23% on the print (like SAP was), fear was appropriately “priced” yesterday. Lol

And you can go back to the end of the rainbow passage in yesterday’s Early Look where October 23-31 ended it for anything and everything consensus buy-and-hodlers thought about stahks! in 1929.

Immediate-term @Hedgeye Risk Range with TREND signal in brackets:

UST 10yr Yield 0.70-0.88% (bearish)
SPX 3 (bearish)
NASDAQ 11,305-11,808 (neutral)
Tech (XLK) 115.07-122.99 (neutral)
Shanghai Comp 3 (bullish)
Nikkei 238 (bullish)
DAX 12114-12698 (bearish)
VIX 24.85-33.66 (bullish)
USD 92.31-93.36 (bearish)
EUR/USD 1.168-1.190 (bullish)
USD/YEN 104.33-105.80 (bearish)
Oil (WTI) 38.35-41.90 (bearish)
Nat Gas 2.76-3.33 (bullish)
Gold 1 (bullish)
Copper 3.02-3.21 (bullish)
MSFT 208-223 (neutral)
NFLX 465-510 (bearish)
Bitcoin 12,154-13,637 (bullish)

Best of luck out there today,


Keith R. McCullough
Chief Executive Officer

Fear #Overbought - CoD BTC