The Destruction Theme
There are two dominant circumstances that make up the destruction theme: Since early 2022 there has been an expansive distribution pattern forming in the major indices. This only became obvious recently after the rejection at 4200 which marked the top of the distribution range. Supply overwhelmed demand in a far reaching, expansive manner. To the point that the markets have done nothing but decline since that time, in a manner which suggests that 4195 was the top for 2023. The fact that a majority of investors continue to believe that the October low was THE low for this cycle creates a significant vulnerability in the markets moving forward. This becomes all the more evident as the markets draws closer to the October lows while distribution continues, paired with technical deterioration across the indices. There are numerous pieces to this puzzle that are far too detailed to get into here. Our weekend Turning Points note has gone from 11-12 pages on average each weekend to 16-18 pages recently as I detail all the data pointing to the rejection at 4200 being a severely underestimated, highly significant technical event that virtually guarantees a retest of the October lows, at a minimum, with a high likelihood of new lows in the offing. Distribution and the refusal to suspend disbelief of certain outcomes have led to consequences in the markets throughout time that are often times destructive, to put it mildly. This is one of those instances. As I have been detailing since the beginning of February, we have arrived at a point in time where caution is warranted at an absolute minimum. We have been building short positions throughout February in anticipation of what is to come, taking a more aggressive stance towards the bearish trend ahead. Be careful out there. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
Weekly Note Preview: Continued Signs Pointing To The Importance Of The Recent Top, What It Means For Investors and Detailing Two New Short Ideas
In this weekend's 329th edition of Turning Points we have an 18 page note going over the developing top from 4200 on the S&P along with the introduction of two new short positions to add to our Aggressive Bear Portfolio that capitalize on emerging bearish trends in the markets. What follows is an excerpt from this weekend's note. MARKET UPDATE This 329th Edition of Turning Points is going to be extensive. I have a lot of charts to share as there are significant shifts taking place in the markets that have some very real consequences for investors during the weeks and months ahead. I don't necessarily enjoy being an alarmist. Those of you who have been reading my work for a number of years know that this is the first time I have struck such a bearish chord in well over a decade. I'm a perennial bull. In 2011-2012, I was writing about how investors were significantly underestimating the upside in the markets, discussing a bullish super cycle (Google: Zeonolytics Supercycle) taking place during the decade ahead. I viewed every dip as a buy. I dismissed every bearish argument all the way up. My bullish persistence was primarily rooted in my technical work of the markets. During the entirety of the uptrend, including the 2020 pandemic crash, the 2018 taper tantrum and so on, there was nothing that concerned me technically beyond what I viewed as temporary interruptions in the uptrend that investors inherently overreact to each and every time. What I am seeing as we are still early in 2023 is different, however. In recent editions of TP, I have highlighted the fact that the market are undergoing distribution on a scale that we haven't seen for the entirety of the bull market, off the 2009 credit crisis lows. As I highlighted in the 328th Edition of TP from February 19th, the chart of the S&P 500 strongly suggests that the entirety of the consolidation from April 2022 until now is simply one giant distribution pattern prior to the next leg down. If this analysis turns out to be correct, then the next leg down will be the most substantial selling event of this bear market. You don't break a nearly year long distribution pattern gently. When it breaks, it is a violent, persistent and generally, ugly event. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for...
Tomorrow’s Price Action Provides An Opportunity
It was just about a month ago that investors were clamoring for a significant dip to get their allocations to the long side of risk right. As of today, we have moved below 4000 on the SPX from a high of near 4200, giving investors exactly what they were looking for. And therein lies the issue, among many others that have come up over the past few weeks. Bull market reversals off extreme lows do not provide opportunity for those who missed the lows. Instead, they take opportunity from those who missed the lows by forcing them into uncomfortable buying decisions. The more discomfort arises for those who missed the lows, the more legitimate the rally. It really is that simple. True bull market market reversals force the issue. They force discomfort. They make investors chase obscene prices. After being bullish off the October lows, the distribution patterns along with a myriad of other issues popping up have forced us into a bearish position for the first time since September. The NVDA earnings induced rally we experience tomorrow will only provide an opportunity to add more short exposure before the next down leg occurs. Positions and plans forthcoming. Looking forward to capitalizing on tomorrow's price action. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
Weekly Note Preview: What The Numerous Distribution Patterns Popping Up Mean For The Markets During The Weeks and Months Ahead
In this weekend's 328th edition of Turning Points we have a 16 page note going over the numerous distribution patterns showing up in the market after nearly two years of sideways consolidation and what they could mean for the weeks and months ahead. What follows is an excerpt from this weekend's note. MARKET UPDATE During times like this, the best course of action is always to simplify to the greatest degree possible. It doesn't get any simpler than the chart of the S&P 500. For this chart, I have intentionally highlighted the 4200-4350 level. More specifically, the resistance envelope (red, gray, white trajectory lines) that exists in that range. More than anything else, this highlights a very real problem for the markets moving forward. I'll explain why. First, here is the chart: I have purposely lightened a majority of the technical support/resistance points on this chart so that the red and white trajectories stand out. You will immediately notice on this weekly chart that going back to December 2018 (the infamous taper tantrum), March 2020 (pandemic panic) and 2022, whenever this series of trajectories has broken from above, the markets have become extremely slippery, extremely fast. These trajectories go back to 2008/2009, carrying quite a bit of weight for the entirety of this bull market. They are extremely relevant, in other words. I have been discussing speed and time being of the essence for the markets since the beginning of this year. The S&P chart above and more specifically, the manner in which the market is consolidating below the red and white trajectory points is the reason. For example, you can see that during the December 2018 panic, the market realized time was of the essence, quickly regaining the trajectory. You can see that during the March 2020 panic, the market realized time was of essence, quickly regaining the trajectory, despite moving well below it during the pandemic crash. This time is very different, however. Investors are not bidding up the markets in a frenzied fashion as they have in the past. Instead they are slowly distributing stock over time. A distribution pattern. And it's a very significant one, in fact. The significance comes from where it is occurring along with the length of time that it is taking. The breakdown of such a pattern carries technical consequences that are extreme in nature. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of...
Intra-Week Update Preview: Detailing One Of Our Favorite Shorts In The Months Ahead
In this 327th edition of Turning Points we have a 5 page note going over one of our favorite shorts that put in significant blow-off top today. PORTFOLIO UPDATE I will discuss the markets in detail this weekend. Overall, I am getting very bearish with continued technical confirmations that something is certainly awry. With that said, the next leg of the downturn, if it does come to pass, will be the most vicious. My goal, more than anything else, is to avoid and hopefully capitalize on what is to come in the best way possible. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
The Technical Outlook For The Rest Of This Week Starring The S&P, Bonds and USD
Back to the long side today after observing the following setups in the final hour of trading. First, let's review: Wednesday was a setup day to determine how the rest of the week would turn out, whether bullish or bearish. After Tuesday's price action, Wednesday's results became largely uncertain, prompting us to move to cash. We went long in the final hour of trading today upon seeing the following technical setups, along with other macro and technical factors that have a high probability of setting up this week to end strongly on the bull side. A lot of traders are watching 4200 now. If we hit 4200, which I expect by tomorrow or Friday, the market won't simply stop there. Too much attention being paid to this level at this point. Expecting, at least, 4220 with the possibility of 4250-4275. I have been saying for sometime now how explosive a level 4200 can be. We are about to find that out in real time. Bonds next. Traders are too deeply entrenched ahead of the PPI tomorrow. This is a similar setup to the CPI on Tuesday forcing an unwind into equities, creating a sustained bid for equities throughout tomorrow. Lastly USD. Exact same setup as bonds. USD investors are too deeply entrenched before the PPI tomorrow. They will be forced to unwind on most any number. Bond and USD unwinds force a sustained bid in equities throughout tomorrow, allowing for 4200+ to be reached. Option expiration week only amplifies the volatility. That's it for tonight. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
Equities Were Going To Be Bid No Matter What Today, But Something Happened Along The Way
After getting net short for the first since September to start last week, we came into this week getting long for a 2-3 day trade going into the CPI. As detailed here, the CPI was going to be bid under most any circumstance, barring an absolute scorching hot print, which was a very low probability. In any case, the opportunity to get long on Monday morning at the open was not so much an opportunity that had potential for massive rewards, but rather an opportunity to take on long positions for 2-3 days with very little to no risk. The stock market version of a free roll. We took the opportunity with the intent of getting out of our longs on Wednesday-Thursday. However, something happened today that caused us to move back to cash. That something was despite macro investors coming into today max short bonds and long the USD, there was enough flow moving their way that they were allowed to sit relatively comfortably to see what transpires into tomorrow's trading. That's right, the markets allowed them to live to fight another day. Upon seeing the reversal in bonds and the USD, along with the volatility in the equity markets, the decision to get back into cash was an easy one. The fact that the markets were not able to exploit bond and USD investors today, who were front running this CPI number for multiple trading days leading into this morning's release is a definite short-term negative. More than likely resulting in weakness through tomorrow, at least. Depending on the extent of any decline that takes place tomorrow, the decision can then be made as to what the next set of steps will be. For now, it's time to observe how the market reacts to key levels starting with 4110 on the SPX. S&P futures down 19 points tonight. Nasdaq down 82. Goodnight. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
Here Is The Call For CPI Tomorrow
After getting into cash to begin last week, we reinitiated long exposure on the open this morning moving back to near 100% invested on a notional basis. In this Sunday's edition of Turning Points, I outlined our decision to again get long in a 16 page report. The reasons for switching from net short to net long are based on technical, sentiment and some macro reads on the market for this week. One of the primary dilemmas that bears face going into tomorrow's CPI is that investors have become overextended in their bond and USD positioning. Namely, too many investors fell for a cooked jobs report, expressing their renewed hawkish sentiment by selling bonds and buying USD. The good ol' inflation trade came back with a vengeance throughout last week. This sets up a real problem going into tomorrow for bears. Everything but a scorching hot CPI number (I put the probability of this at around 1%-2%) causes bond sellers and USD buyers to massively unwind the positions they built up last week. In the meantime, last weeks selling got the bears attention in equities, with short positions being built up again, while bulls have been sidelined going into the CPI. There are a million and one analysts parsing through the data to guess where CPI will come in tomorrow. Pinpointing the number through in depth fundamental analysis of every price point isn't what I do here. What matters going into these types of events more than anything else is the predominant allocation of capital among investors. These types of focused allocations represent holes in the dam that markets inherently break with overwhelming force. Tomorrow the markets will do what they like to do best: Take a sledgehammer to what everyone thought was the right allocation last week, starting with those betting on higher yields. Moving onto those betting on a higher USD. And naturally, bidding up equities as a result. Looking for another test of 4200 (4210-4220 to be exact) this week. Good luck tomorrow. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...
Detailing Our Decision To Get In Cash or Net Short
For the first time since the September/October time period, Zenolytics portfolios have moved to a net short position. This is after being upwards of 200% long throughout the majority of January, taking advantage of primarily growth stocks with one crypto in particular (RNDR) giving us a 150% gain since August. We are out of everything, but a couple long-term crypto names. Our portfolio of growth stocks has done what it was meant to do. That is to produce a furious snap back rally, riding on the back of short sellers, investors who were forced to take exposure into the new year, and dreadfully misallocated portfolios that were built on fear of Q1 2023 being a replay of Q1 bear market action in 2001 and 2009, as two examples. During this past weekend I put out an 18 page report to clients with 17 charts detailing why, at a very minimum, it is time to be conservative with overall exposure to risk assets. There are a number of factors involved in completely flipping our exposure this quickly, some of which are macro based, but most of which are technically based. The bottom line is this: The markets are well behind schedule. I have been emphasizing in recent weeks that speed is of the essence moving forward. This from January 10th, with the SPX at 3900: This past Thursday we hit 4195 and reversed. The fact we are sitting around 4100 is now a problem. This is the same vicinity the S&P 500 was during Powell's now infamous Jackson Hole speech on August 26th, 2022. Two days before Powell spoke at Jackson Hole, the SPX was at nearly the exact same levels as prior to his speech tomorrow (today depending on where you are). We have made no progress despite an abundance of clarity with respect to inflation and the Fed since the August Jackson Hole speech. The markets are looking at something else. It's a guessing game right now as to what that is, with macro analysts coming up with everything from earnings to more rate hikes than anyone expects. We don't necessarily need to know exactly what the market is looking at to delay making substantial progress. The fact that the delay is taking place, while numerous rejections take place along key resistance points in all types of major averages is enough to step back. Investors must now demand clarity from price before further committing to a market that has seen a significant shift from extremely bearish to quite bullish in just a few weeks. On...
Weekly Note Preview: A Market Update & Two New Trades Initiated After Today’s Move
In this week's 323rd edition of Turning Points we have an 8 page note going over what the recent display of strength in the markets means looking out 1-2 weeks, along with two new trades, one in our short-term trading portfolio and one in our intermediate term swing trading portfolio. MARKET UPDATE The expected 25bp hike came today with an unexpectedly dovish Powell forcing investors to completely unwind the inflationary trade. This meant lower yields, lower dollar and higher prices for risk assets. This has been an impressive week in one way in particular. For all intents and purposes, the SPX should have tested the 4000 level this week. For all intents and purposes, the NDX should have tested the 11700-11800 level this week. The best the bears could do after a convincing reversal on Monday was 4015 on the SPX. What seems to be informed buyers conspicuously came into the market immediately on Tuesday following Monday's weakness, bidding up stocks, not even allowing the SPX to touch Monday's low. Tuesday's low was 4020. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. 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...