Today’s Selloff, Election Angst and What To Expect Into Year End
You know that scene where a large tree stump gets shoved into the wood chipper and a mess of unrecognizable wood chips come flying out? That has been our October, with a handful of trading days left in the month. It's an impossible mission to go through any trading year unscathed. As it stands now, October has been the month to challenge our strategy as we have been continually whipsawed from the start of the month. The greater question, putting aside our relatively poor short-term performance, is determining where we will be creating returns into year end? We have had a great year, despite this setback in October. What got us here in the first place was catching a big move earlier in the year that few, if any, expected would come. Any recovery that we will earn into year end will come from catching an extreme risk/reward opportunity that offers up insignificant risk that is only apparent in hindsight. As it stands now, while it may seem like there is a lot of air beneath the market, there is a case to be made for the elections artificially compressing a Dow, S&P and Nasdaq that should have been much higher given the monetary stimulus that has seen the Fed balance sheet reach all-time highs last week and fiscal stimulus that, while being delayed in implementation, is sure to come in the weeks and months ahead. In other words, investors need to ask themselves where the markets would be if this wasn't an election year? There is a very real argument to be made that the September top and the resulting grinding price action ever since has been an effect of the angst caused by the elections being imminent. Once that angst is cleared away, irrespective of the outcome, the markets will be free to focus on what matters: earnings, economic recovery, monetary stimulus and fiscal stimulus. When all of these things are taken together, with very few if any investment alternatives to equities, there will be no choice but for investors to pile into the equity market into year end. The elections have impeded the progress of the markets from late Q3 into early Q4. That impediment is about a week away from being removed. Clarity will bring with it the incentive to act in a manner that favors progress, while putting the uncertainty that has been with us for a majority of 2020 in the past. This is a bullish catalyst in and of itself. The window for bears has closed. The bulls will rule the day post November 3rd. Zenolytics now offers Turning Points Market Intelligence...
Weekly Note Preview: What The Dow of 1938 Is Telling Us About 2020; What the Nasdaq of 1999 Is Telling Us About 2020; Two New Developments In The Market; New Positions Being Taken
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. In this weekend's 15 page note we discuss: What the Dow of 1938 is telling us about the market in 2020 What the Nasdaq in 1999 is telling us about the market in 2020 Two new developments that could serve as a market catalyst The significance of bond yields moving up in recent weeks while equities consolidate An old economy sector that is signaling economic strength ahead A review of the Nasdaq, S&P and SOX New positions being taken for what lies ahead into and after the election To view the entirety of this weekend's note, you can subscribe by clicking here. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing. Information throughout this site, whether stock quotes, charts, articles, or any other statement or statements regarding capital markets or other financial information, is obtained from sources which we, and our suppliers believe reliable, but we do not warrant or guarantee the timeliness or accuracy of this information. Neither our information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in, the transmission thereof to the user. With respect to information regarding financial performance, nothing on this website should be interpreted as a statement or implication that past results are an indication of future...
Weekly Note Preview: The Shifting Liquidity Foundation of The Markets; Early Risk On, Risk Off Warnings; Gold and Silver; The Real Technical Signal In The Nasdaq and S&P
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. In this weekend's 13 page note we discuss: The shifting liquidity foundation of the markets The potential for early "risk on," "risk off" warnings from the currency markets Gold and silver The real technical signal that the Nasdaq and S&P are sending after this week MARKET UPDATE Let's begin with what is the most important underlying movement in the markets over the past month. The liquidity foundation of the market has shifted from the post virus crash, QE induced framework to something much different. Typically, when the liquidity foundation of the market shifts, as it has over the past several weeks, risk becomes an issue. However much the market chooses to ignore the risk determines the severity of the downturn when the risk is recognized by the markets. In other words, the longer the markets delay recognizing risk, the more potential for a significantly negative outcome over a short period of time. Of course, it goes without saying that we are in a political/macro environment that is unlike anything witnessed in quite sometime. In a little more than two weeks one of the most anticipated elections will arrive on the scene while investors who are seemingly concerned about potential instability as a result of any myriad of unpredictable election outcomes have decided to take the road most traveled by declaring their complete faith in the Fed, with any potential weakness in equities being nothing more than a blip on the radar before they are rescued, being made whole once again. When one takes into account the liquidity foundation of the markets; the pervasive use of leverage by investors; the exposure levels of all classes of investors; and the emerging risks chasing the market from behind, then we are left with an environment that can get slippery quickly. This is no longer the market of Q2 and most of Q3 when you could be confident that downside slippage would be negligible, making most any dip a buying opportunity, with the ability to leverage significantly. That's what you get when the liquidity foundation is intact, while investors have yet to fully embrace the bullish argument, remaining cognizant of risk that is in the rear view mirror, which naturally creates the necessary wall of worry for the markets to climb. As it stands presently, the majority of investors who are significantly exposed to equities are underestimating their risks, while blindly putting faith in a Federal Reserve that has made it clear that the next phase of...
Weekly Note Preview: The Ramifications of a Flat Fed Balance Sheet; Indications of Liquidity Drying Up; Analysis of Potential For Fiscal Stimulus; Targets For Nasdaq In October
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. The excerpt from last weekend's note is available here. In this weekend's 11 page note we discuss: The ramifications of a flattening Fed balance sheet at this stage of the recovery Indications that liquidity is drying up Analysis of the potential for fiscal stimulus to be passed and when it might pass The likely reaction to a fiscal stimulus package passing in the near-term The earnings season ahead Continued analysis of the shifting landscape beneath the market Targets for the Nasdaq in October MARKET UPDATE The bullish argument as we move into Q4 of a year many are looking forward to putting behind them is largely founded on factors that are now largely accepted as fact. The very act of investors accepting these arguments as being fact equates to capital being allocated in a direction that seeks to take advantage as the perceived outcome evolves through price. Naturally, that capital becomes vulnerable to sudden shocks that challenge the consensus understanding of the time. In order for bullish positioning to continue experiencing an upside push, investors are now relying on three catalysts to come together: 1. Fiscal stimulus 2. Continued momentum in corporate earnings 3. Continued momentum on the macro economic front At the same time, the liquidity foundation of the markets is not nearly as robust as most investors assume. Since June, the Fed has refused to grow their balance sheet, essentially cutting off liquidity, relying on momentum from that initial injection to prevent a full blown, long-term economic crisis. In this weekend's 11 page note we discuss: To view the entirety of this weekend's note, you can subscribe by clicking here. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors...