The Most Important Chart As We Enter A New Week
Just released the 488th Edition of Turning Points. A 17 page note with a primary focus on crypto as this constitutes our largest current long exposure. We also covered a new earnings play that we will be initiating on the open Monday morning. However, a good deal of attention was focused on where the market averages are choosing to camp out as we head into Q3 earnings and elections. Specifically, check out the NDX. February, March, April, part of May, some of June, part of July, some of August, half of September and all of October have been spent around the same trajectory. Throughout all of these time periods, we have had what seemed in the moment to be potentially explosive events that would have the markets making a decisive move to once and for all slay the proverbial dragon. However, throughout the entirety of 2024, the market has refused. It is sticking to a comfortable path forward, which isn't necessarily always the most productive path forward. The market needs to establish a new trajectory forward on the upside fairly quickly or time will be up. In establishing a new trajectory forward, whatever coming correction ensues will cover ground that won't be terribly damaging. However, sticking to the same key red trajectory, once a correction comes, can lead to losses that will prove difficult to stomach for most. Additionally, sticking to the same key red trajectory into mid-November/December increases the possibility that whatever breakout is seen above this technical point will be subject to retracement. The bottomline: The NDX needs to starts outperforming. The SPX being up more than the NDX in 2024 is a point of weakness for the market that remains exploitable. We are currently long China (have been since April), biotech, crypto, small-caps, while being short growth. Zenolytics Turning Points is nearly 500 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...
Something Happened On The Road To Valhalla
Perhaps it is of little coincidence that the MOVE Index, a measure of bond market volatility, has decided to select this specific time period as a breakout point following a near 18 month downtrend. What this chart represents is essentially a magnifying glass placed by the market right on top of the Fed, investigating the intricate details of the recent policy error that was slashing rates by 50 basis points. Equally significant, the 18-month breakout in bond market volatility signals a lack of confidence in the Fed's future monetary policy decisions, particularly regarding interest rates. Lastly, and perhaps most importantly, what this range expansion to the upside in bond market volatility represents is a demand by the market for measures to insure that long term rates remain in line with the overall objective of the Fed for monetary policy to be less restrictive overall. While the recent massive spike in rates is short-term restrictive, it also intermediate to long-term accommodative in that it will force the Fed to act in a more creative manner, so to speak, with respect to future monetary policy decisions. Being long assets that will benefit from creative monetary policy efforts, both domestic and foreign, is likely a prudent investment. At the same time, being short assets that will find a higher rate environment disturbing, in case of a bond market gone mad, is equally prudent. Forest meet tree. Zenolytics Turning Points is nearly 500 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...
Onto Q2…With A Caveat
As we close out a stellar Q1 at Zenolytics, I want to highlight one element of trading during this quarter that deserves everyone's attention as we head into Q2. For reference, this was a tweet from early in the quarter, on January 19th: Turns out this resistance area on the NDX was indeed the spot, as once it was touched, the character of the market shifted entirely. Here is the NDX chart after today with the same trajectory sitting in red. Not coincidentally, the red trajectory marked the ceiling for this rally for entirety of the second half of Q1. Certainly within the realm of possible outcomes for a rally that very few saw coming in the first place. So what now? Q2 gets exponentially trickier. What we have seen during the past few weeks is but a preview of what to expect during the months to come. Price action will be much more choppy. Leaders will rotate dramatically. Investors who fail to be agile with their trading will be run over completely. What the pause at the key red trajectory signifies is a market that is preparing to go to war with investors. That war will involve numerous whipsaws prior to the market finally deciding on a direction from here. A high probability exists that the direction will be up. Prior to that taking place, however, there will be numerous whipsaws and misdirection plays that can be taken advantage of through the right allocation decisions at the right time. The easy part of this rally is behind us. Spring trading has always been a difficult proposition for investors, giving birth to sayings like "sell in May and go away." While we have no plans of going away at any point soon in this magnificent bull run, it would be wise to guard your gains during the weeks and months ahead. 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...
Weekly Note Preview: The Evolution Of Perfect Price Structure In The Major Indices; Investor Embrace Of Pessimism At First Sign Of Trouble; Timing A Short-Term Peak; Catalysts In The Week Ahead; A New Aggressive Bull Position; Crypto Strategy
In this weekend's 409th edition of Turning Points we have an 11 page note discussing the continued perfect price structure taking place in the major indices; investors embracing pessimism at the first sign of danger; timing of a short-term peak; macro and micro catalysts in the week ahead; a new Aggressive Bull portfolio position; crypto strategy for the months ahead. What follows is a brief preview from this weekend's note: In the midst of perpetual doubt brought on by the grief suffered at the hands of sadistic market action from January 2022 all the way until October 2023, the markets have spontaneously put together one of the greatest rallies in history. Despite the markets vehemently expressing to investors that they have suddenly been injected with a sense of vitality and optimism, investors remain skeptical, unable to shake off the trauma suffered in years past. When looking at the 20 day moving average of the equity put/call ratio we see that despite a record setting rally, the appetite for puts at the first sign of distress remains unusually high. In terms of overall investor psychology, not only is it the case that optimism is yet to be found, but there is a distinct sense of dread pervading price action. Markets that have investors feeling especially comfortable do not experience anomalous pessimism spikes in the put/call ratio as we observed just a few weeks ago. In the face of what has become a perpetual cycle of pessimism, the price action continues to tell a different story than the bearishness investors seem to be overly anxious to embrace. 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 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...
Something Happened On The Way To 4600
Something happened on the way out of the turbulence channel I have been highlighting for much of July. That something has to do with earnings being sold. While at the same time bonds deciding to go into kamikaze mode, causing a significant spike in yields. And numerous correlations breaking down all the meanwhile. While the overall outlook remains generally bullish, there is reason to believe that the markets are now off course from the desired destination, which had us above 4600 by now. You can see in the SPX chart above that the turbulence channel represented by the white, gray and red lines has presented problems for this market since the middle of 2022. Here we are again in the middle of 2023 with a powerful reversal on July 27th turning into further distribution of stock from Wednesday until Friday of this week. 4445 now becomes a make or break level for the markets over the next few weeks. In fact, this is one of the most important technical tests of the year that is about to take place, with a high probability of it occurring this week. Investors are well advised to remain on their best behavior over the short-term. Make sure you are trading and not hoping. How the market handles 4445 moving forward will tell us everything we need to know about what to expect for the remainder of August. Zenolytics Turning Points is 350+ 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 Current State Of The Markets
In this weekend's 357th edition of Zenolytics Turning Points I went over the ultra long-term cycles that are ultimately dictating the moves that have confused, bewildered and angered so many investors and traders in 2023, along with the best ways to take advantage of the stage of the cycle we currently find ourselves in. At its absolute essence, market prices dictate fundamentals, not the other way around. George Soros calls it the Theory Of Reflexivity, other investors have given it different names. However, it is the most important reality that investors consistently refuse to face to their own detriment. Coming into 2023, there wasn't a single fundamental indicator that would have told you the Nasdaq during the first half of the year would put in one of its best performances ever. What did tell you of this outcome was a mix of elements that have nothing to do with fundamentals, and everything to do with psychology, price structure and market cycles. This from my tweet on December 20th of last year as everyone thought we would be in a recession, with the SPX at 3000 by now. Here we are halfway through 2023 with investors indeed being surprised by the upside that has taken place. The fact of the matter is that upside of this nature doesn't simply take place to allow the army of bearish investors that exist an opportune entry point to get short or in cash. Upside of this nature in the face of every conceivable fundamental headwind possible over the past 6 months takes place because the markets are looking at a point in time and a future reality that few can grasp at this moment. The absolute fundamental construct of what exists 9-12 months ahead is impossible to assess. However, what is possible is to properly judge price, allowing it to guide allocation decisions without bias. Price continues to dictate increasing allocations as we have been steadily executing in recent weeks, with a new allocation taking place as we start the week ahead. Looking for continued upside as the markets continue to steadily climb away from the majority that never saw this coming. Act accordingly. 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...
On The Final Trading Day of June, This Happened….
That final bar of the final day for the final month of the third quarter. That bar wasn't a coincidence. The market didn't gap up above key resistance, essentially forming a thrust, turning former resistance into support on the final day of June and the final day of Q2 on accident. The market didn't end the day, week, month, quarter and year to date 2023 on the final day of Q2 at its highs because we have tough times ahead. Everything that you just witnessed was purposeful and consequential. There are no accidents in the markets. There is intent and purpose behind everything. Innocuous and inconspicuous bullish price formations have been with us for this entire move up, while the markets worked their slight of hand, focusing everyone's attention on inflation, the Fed, Ukraine, China, recession and so on. None of this was an accident. Price was speaking to investors the entire way up. What is separating the winners from the losers in 2023 are those who chose to listen to price and those who chose to ignore it. It really is that simple. And yet again, price has spoken investors on Friday, June 30th. Those who continue to listen will be the ones who walk away with the greatest profits come July 31st. Rinse and repeat. Horns up. Paws down. 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...
Today Was Consequential Despite The Flat Finish
Here is why: As the market consolidates right at key resistance, we can see that for two days in a row we have touched the resistance level on the dot, closing slightly below resistance while consolidating perfectly. Notice how the daily ranges have been contracting on the way down, with today continuing that trend as we experienced a range day that was less than 50% of yesterday's overall trading range. What does this represent? It represents bidders remaining a dominant force in the market. When bidders disappear during a pullback you see large ranges with sloppy price action along the way. When bidders remain a dominant force in the market, you see tight ranges with clean price action as those bidders are consistently deploying capital, efficiently cleaning up any mess that sellers attempt to leave behind. Put as simply as possible: Bidders remain a dominant force in this market. What that means is that all the fear based nonsense you hear about the markets being on their last leg, this being a suckers rally, bear market remains intact, a recession is around the corner and so on should be muted. What is important are the capital flows. And according to everything that price action is telling us, the flows remain very bullish. This is but one of the many bullish indicators of what is to come. The horns are getting sharper by the day. 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...
We Have Arrived
I've been discussing 4300 since covering shorts and getting bullish in late March/early April. Fast forward here we are two months later. 4200 really didn't offer up much resistance. 4300-4350 is a different story, however. The high for Friday's trading sessions was 4290. We are now entering the zone. It's not just the generational resistance that comes into play at 4300-4350, going back quite a few decades, it is also a long-term supply area as shown by the following charts of the SPX and NDX. The exact levels the SPX is testing now are where the breakdown in the market emanated from in 2022. Markets have a memory. That memory includes jaded investors who held through the entire scary, Fed induced, macro laced market of the past 18 months. Those investors will be creating supply as the SPX moves back above the breakdown area. To be clear, there is enough emerging demand that they won't be able to tank the markets, but they can grind things to a screeching halt for the time being. A few other factors coming into play, like a spike in yields, has the potential to turn things ugly for a period during the first few weeks of June. Same thing with NDX, supply area ahead. The NDX broke down from this price level in early 2022, retested it shortly thereafter and then fell into oblivion for a time. This becomes a natural resistance area where supply comes into the market for a time. It's not just this resistance that is in play up here, however. In this weekend's edition of Turning Points I shared 11 charts pointing to now being the time to be conservative, at the very least, with long positioning. An important week ahead technically. Let's see where it takes us. 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...
The First Half Of June Promises A Different Look From What Investors Have Recently Become Used To
While most everyone was convulsing in fear over the ramifications of a debt ceiling debacle, while also being paralyzed by the emotional abuse the market has handed out on a consistent basis for the past 18 months, the Zenolytics team (consisting of just me) ignored the noise, doing what we do best: That is identifying truth in price. Prior to the acceleration of trend in the NDX and the breakout in the SPX, about 1000 points ago and 200 points ago respectively, on May 18th I published a note on this site titled Here Is Why We Are In The Midst Of The Most Important Move Of 2023, With An Even More Critical Move Being Imminent. Now that most everyone has realized what we knew weeks ago, there is an argument to be made that the markets will be offended for a short period of time. The offensive nature of what has transpired comes in the form of investors believing that the markets will accommodate their sense of cowardice, by allowing a threat free jump into the water now that the danger of getting bitten by any number of fanged creatures has disappeared. Debt ceiling behind us. Earnings better than expected, much to the shock of nearly everyone except for us here. Fed is quickly moving to the rear view, with economic data having less of an impact. All of these macro factors are fantastic indicators of intermediate to long-term strength in the markets. However, over the short-term, the feeling of safety investors have recently experienced must be tested. There are numerous examples of investor comfort coming to a crescendo this past week. Here is one with the 2 and 5 day moving averages of the equity put/call ratio nearing their lows for 2023. And surprise surprise, the last time the put/call was at these levels in early February the S&P was testing the same trajectory we are about to test now. To be absolutely clear, I remain bullish throughout the remainder of this year. The surprises will continue to be to the upside. However, in the very near-term (next 2 weeks), there could be a bit of turbulence to throw everyone off until the markets begin to gain traction in anticipation of what is to come. I'll get to what is to come in a future note. In the meantime, approach new positions on the long side with caution and treat profits with care, while carefully guarding them. Have a good weekend. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and...