Weekly Note Preview: The Confluence Of Factors Playing Into The Long-Term Secular Bull Cycle; The Best Sector To Take Advantage Of What Lies Ahead; What We Plan On Doing With Our NVDA Long Position; A New Position Being Initiated
In this weekend's 418th edition of Turning Points we have a 15 page note reviewing long-term expectations for the markets; The best sectors to take advantage of what lies ahead; A review of crypto, including the current state of alternative crypto investments; What we plan on doing with our NVDA long position; What to expect from the markets during the weeks ahead; A review of a new position being initiated on Monday. What follow is a brief preview from this weekend's note: We are in an unusual space in time given the convergence of a number of unprecedented technological, economic and geopolitical developments taking place simultaneously. This naturally creates the tendency towards caution as there are few corollaries to what 2024 and onward is in the process of becoming. The predominant sense of caution is further amplified by where it is we have come from the past several years. Whether the extreme volatility of the 2020 pandemic market or the recent 2022-2023 secular bull market consolidation that saw mega-cap tech stalwarts like META lose 80% of their value from peak to trough, investors have been conditioned to expect the worst and hope for the best. Let's consider for a moment where we are in time: - Geopolitical power structures shifting - USD reserve currency dominance being challenged - Inflationary pressures unpredictable - AI creating growth that is exceeding that of the dot com boom - AI creating economic, social and political ramifications that are both unpredictable and unprecedented - Crypto being an unregulated, highly speculative financial sector seemingly waiting in the wings for AI integration, while demonstrating continued resilience against regulatory authorities - Developed nation balance sheets being leveraged to the hilt, with massive amounts of liquidity remaining in the global economy - A two year consolidation in the US markets in 2022-2023 that created extreme volatility in key assets, further dissuading investor participation - A secular bull market that, as I have demonstrated in the recent past, is squarely mid-cycle in terms of overall age A literal powder keg of technological, economic, social, political and technical convergences. Bringing us to what is the most important chart in finance. This is a chart I have been sharing for nearly a decade now, as it continues to track expectations perfectly. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 400+ 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...
The Market Balancing Act In Progress
NVDA's earnings report created the necessity for a market balancing act to take place over the next several days. That balancing act has everything to do with the fact that AI might just be in the middle of its 1st inning of growth, with Wall Street slowly but surely catching onto this fact, while the markets continue to struggle against some hefty overhead resistance in the NDX. Additionally, the specter of higher rates lurking in the background is creating an environment that is rife for excess volatility. The issue is that when coming against monster resistance at 18100-18200 on the NDX, the last thing you want to see is excess volatility. NVDA, interest rates and the inevitability of instability created as a result of focusing on economic data during the weeks ahead only exacerbates this. There is going to be a lot of excitement during the days ahead as the markets will likely continue to march forward. However, there remains a case to be made for watching your risk now more than any other time thus far this year. Let's see how the markets deals with key resistance during the days ahead. This will tell us everything we need to know about the adjustments to make during the coming weeks. Zenolytics Turning Points is 400+ 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,...
Today Was By No Means A Fluke
For two months how I have been feverishly bullish on stocks, discussing new all-time highs by the middle of January in early December when very few thought such a move was possible. When in mid-January we hit the 4850-4900 target I had outlined in the months prior, immediately my focus shifted to the NDX 18000 level as the next test for the market. Then yesterday prior to today's CPI release, I said very specifically do not take Monday's reversal at 18000 lightly. That reversal was a very early recognition move by the market that was spot on at a very precise target. The very first signs of smoke where there is now a fire. Here is the tweet from Monday: Now as we sit with a significant reversal taking place at a resistance area that has been treacherous for the markets going back more than 14 years, I want to again emphasize that investors should not be dismissive of the bearish signals that are suddenly beginning to pile up. While I expect the markets to be much higher by the middle of this year, from now into the end of Q1 has the potential to be a treacherous affair. We all came into this year expecting rate cuts. We all came into this year expecting to put the Fed on the back burner by spring, instead focusing on good earnings, a relatively healthy economy and several technology themes driving momentum. Instead, after today, we are again mired in the Fed watch doldrums. We have to mince what Powell says. We have to pay attention to Fed governor speeches. We have to wait for critical economic data before the market is given permission to choose a side. Earnings are behind us and now this is what lies ahead until what is more than likely the late March Fed meeting. Until then cash levels should be high. This is a bull market so risk should not be shunned completely, but it needs to be managed. We sold all of our growth names on Monday, with the exception of a single small-cap name. Currently sitting on our largest cash position in months. Content to wait this out, knowing that a buying opportunity will come, allowing for some outstanding gains if one chooses to be patient. Let's see how this all shakes out before recommitting. Zenolytics Turning Points is 400+ 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...
Tomorrow’s CPI Is Not So Cut And Dry
Tomorrow's CPI is not so cut and dry. This isn't so much a contrarian view as it is a study of the dynamics taking place in the markets prior to the CPI release. Most obvious of which is the fact that bonds have developed the penchant for persistent weakness irrespective of economic data. All this is taking place, by the way, as numerous inflation gauges tell us that inflation is, at least temporarily, a relic of years past. Even in the days leading up to the CPI release, when you would expect bond shorts to cover some of their exposure ahead of the data tomorrow morning, not a peep. They are simply sitting tight with yields steadily moving up over the past several trading days into the report. It is strange, to say the least. It is easy to be dismissive of this signal, expecting that "bond investors will get it, don't worry." When taking into account that we are witnessing this type of rate divergence, paired with the NDX hitting a key resistance level at 18000 that I have been discussing for weeks now, promptly reversing today's gain right off of resistance, then you should expect market shenanigans are around the corner. We have taken preventive measures so as to be much less exposed to any shenanigans moving forward. The second half of February deserves some caution. Zenolytics Turning Points is 400+ 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...
Some Observations
Numerous stats about the lack of broad market participation are making their rounds. What this tells us more than anything else is that making money in this market remains hard. It also tells us that investors continue to give the cold shoulder to everything but a handful of momentum driven names. What this data DOES NOT tell you is that a market collapse is imminent. Doing less in a bull market works. Thinking less works even better. There are a million and one supposedly bearish data points that will come across your screen daily for the next couple of years. You can then point your finger and say, "see, there is the market top, we can't go up much more with this happening." Markets will keep climbing that wall of worry. Do not be part of the wall. Crypto market caps, especially in the alternative space, look like they are about soar. The only requirement? Patience. Pick a few names that have potential and ignore the price fluctuations. Given the overall volatility, timing moves in crypto is for the birds. You want to take positions at the beginning of an up cycle and sell sometime during the middle of the cycle. What will catch most investors off guard about the coming crypto cycle is that it will be higher for longer, to borrow a term from Fed heads. Meaning that in this go round crypto will move more gradually than it has in previous cycles, with the bull trend moving well in 2025, possibly into 2026 before maturing. The reason markets refuse to go down is because they are front running the Fed being behind the curve on their sub 2% inflationary target already being met. The CPI next week will cement this. If you are looking for a top, look towards the latter half of this month sometime after NVDA's earnings. Given the nature of the run we have had, markets continue to consolidate wonderfully, with what looks like the next leg up being imminent. Zenolytics Turning Points is 400+ 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...
After Moving Through The Shock Stage, We Have Now Entered The Awe Stage Of The Rally
It wasn't long ago that the thought of the S&P 500 at 5000 was a mere fantasy for investors. Bogged down by two straight years of everything from recessionary fears to avoiding the grey haired grim reaper (nickname Powell), investors came to see each and every rally as a selling opportunity, clinging to the 2022-2023 playbook they had become all too comfortable with. It was at the beginning of December that it became apparent the markets had a different set of ideas, making it clear to those who understood the significance of the price action at the time that this rally was indeed different. The resistance points of the past were no longer valid. More importantly, the playbook of 2022 and 2023 was now a liability instead of an asset. The market was about to embark on a shock mission that it has now completed. With impressive earnings after the close from META and AMZN, along with the final resistance of the SPX about to fall, while the key NDX 18000 level acts as a magnet above, the awe stage of the rally is set to begin. While the shock stage was a two month affair, the awe stage will be much more short lived. While the shock stage had multiple twists and turns along the way, the awe stage will be vertical. Expect the SPX 5000 level and the NDX 18000 level to be key points in this journey. Those who have not capitulated to the long side to date will be forced to do so during the days ahead. Their capitulation is your signal to raise cash. While the simplicity of buy and hold was the most efficient form of operation over the past few months, this will more than likely change during February and March. The opportunity to outperform will come in buying high percentage patterns that take place after the volatility subsides. The rest of Q1 will be a game of cat and mouse. Make sure you are on the right side of the hunt. Zenolytics Turning Points is 400+ 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...