Preparing For A Post-Election Unwind
In major cities across the US that have previously dealt with politically motivated rioting, windows and doors are being boarded up. This is a real life reflection of the wretched state the US political system finds itself in during the current election cycle. In major markets across the globe, investors are participating in the financial market version of boarding up your windows and doors by either paring back exposure or hedging risk off the books completely. For a demonstration of what hedging risk off the books completely all you need to do is pull up a chart of the index put/call ratio for today. The mother of all spikes, seemingly out of nowhere. This is 100% institutions wanting to tame whatever volatility they feel will arrive in the days ahead as a result of a seemingly unpredictable election cycle. At the very same time, the VIX and VVIX both remain highly elevated as they have been for months in anticipation of the very same thing that index option traders are attempting to front run with today's put buying frenzy. In this past weekend's edition of Turning Points the case was made for the election tomorrow providing clarity and simplicity, with what will likely be a very clear result, followed by an extremely simple methodology of taking advantage of the investment environment that takes shape in the weeks and months ahead. All of this hedging off of risk will have to be unwound in somewhat dramatic fashion should the worst case scenario everyone seems to be expecting not occur. In other words, a clear result, without any surprises in the direction of the current odds on favorite. This isn't necessarily an area to pussyfoot around. After all, the NDX has been range bound for what? Close to six months now. Bitcoin has been range bound for eight. The coil is about to spring as the markets breathe a sigh of relief, with the election cycle behind us and nothing but clarity ahead for at least some weeks and possibly months. We are up to 105% long. Risk on. 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...
How Risk Is Shaping Up To Respond To Earnings and The Elections
There is a definitive argument to be made that the events of the past several months, accelerating into a crescendo of outcomes over the next several days, have suppressed risk to the point that anything but an extreme anomalous circumstance will be greeted with an increase in risk exposure. As the most immediate example, mega-cap tech earnings for this week will likely be overwhelmingly positive in the eyes of investors as election and interest rate chaos have managed to cap the ability for investors to add risk substantially until a conclusion is reached. With both the FOMC meeting and elections coming to a conclusion next week, unless there is a surprise outcome, the path of least resistance will remain for investors to continue adding risk. The only difference will be that with the path of rates becoming further solidified and the elections out of the way, the velocity of those additions will become greater moving forward. In this past weekend's edition of Zenolytics Turning Points, I made this exact argument, in addition to outlining how, perhaps not coincidentally, the price structure of the major averages is confirming that something significant is afoot. As such, we removed our short hedge on Monday, being leveraged long at the moment, with Bitcoin related positions constituting our largest area of exposure. Expect a continued embrace by investors of earnings results as the week progresses, leading into a monumental week to come, where anxiety will be quelled and we can get back to the business of investing for investments sake, without the overwhelming aspect of political noise. 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....
The Setup As We Head Into Elections, Earnings and The November FOMC
A reasonable investor would conclude that if the markets have been reluctant to pull back since the September rate cut, why would they suddenly decide to suffer a pull back just two weeks until election results are determined? Of course, we have to factor in some volatility with the bulk of earnings set to be released over the next couple of weeks, not to mention the early November Fed meeting. What seems to be occurring, however, are the markets factoring in a Trump victory, with a fair deal of hesitancy continuing to exist, in case of results favoring Harris, creating a situation where investors have to restructure a good portion of their bets. In either case, especially when considering the technical levels that the SPX and NDX find themselves resting at prior to the election, a clear result will more than likely be greeted with a great big sigh of relief by investors. A Harris victory would result in an initial jolt downward. However, it would be short-lived. As long as the result is clear, the markets will more than likely take the cap off of the upside, with a significant rally ensuing for some weeks. For this reason, it is wise to assume that the current setup is a rare buy the rumor, buy the news type of event, as opposed to the traditional buy the rumor, sell the news that seems to be worrying some investors at the moment. As far as momentum is concerned, there are two momentum growth names that investors have to own going into December. We have been trading both of these names extensively over the past few years, with a further commitment being made in recent weeks to both. The most unexpected outcome during the weeks ahead would be for earnings, elections and the Fed meeting going by with the markets yawning at all of these events, while continuing their recent propensity towards a lack of overall volatility, while simply grinding along their merry way. Continue to make adjustments as needed. Aggressive when need be. Defensive when need be. There are many reckless among us currently. One sided, extreme biases, while seemingly alluring during persistent trends, lead to misery more often than not. The willingness to adjust will prove invaluable. 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...
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...
The Splits
In this weekend's edition of Turning Points, the case was made for interest rates being offsides as, among other things, locked capital expecting a dire outcome to the Israel/Iran conflict has obscured the rate picture. While certain sectors will benefit from rates coming down, there has been a tendency for risk assets to decline alongside rates in recent months as investors seem to have moved past inflation risk and are now focused on recession risk. In other words, the threat of a soft landing turning into a hard landing is the primary concern. With that said, those concerns have the potential to be magnified during the weeks ahead as earnings guidance will be erratic and economic data will turn from inflation focused with CPI/PPI out of the way, to economic activity. A mixed picture, at best, emerges under even the best circumstances. Rates decline, rate sensitive sectors benefit, most everything else suffers. The market does the splits. The rotation trade is alive and well. Adjust accordingly. 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 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...
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...
The Next Significant Market Trap Has Been Sprung
The tendency for investors to anchor themselves to bearish outcomes has become a feature of this market since the 2023 lows. During 2022-2023 it was inflation, the Fed, with sprinkles of stagflation thrown in for effect. More recently it has become recession, with shades of irrelevant historical comparisons to past shifts in monetary policy from hawkish to dovish that have caused markets to fall once rate cuts commence. Once again, at its root, the bearish argument relies on recession being imminent, as it has been since 2021. Only this time it comes with a brand new caveat - the Fed dropping rates means it is even closer than it has been all those other years. At its essence, the argument is silly. The market will force investors into realizing this during the weeks ahead, with a series of moves that will force this mentality to be confronted in a manner that will be unpleasant for those who are on the wrong side of the trade. Only then will the markets be allowed to entertain the possibility of the Fed being behind the curve, with recession being imminent, once more, even though the outcome will likely end up being much the same as all previous instances. But that's an October/November story. The path for the remainder of August and most of September is forceful, persuasive and demanding of those who fail to fall in line with the simple bullish ramifications of the long awaited shift in monetary policy. Zenolytics Turning Points is 470+ 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...
Market Intentions and Reality
Last weekend's 454th edition of Turning Points called out the premature, elementary level technicians who actually thought the price action from on June 20th - June 21st, would yield gains into the new week. An excerpt from the 6/23/24 note: High for the week was 5524. What was most impressive about this past week is that the market exerted pressure on the bears into the 11th hour, before finally revealing the hand it was meant to play all along, by squeezing the shorts in order to make room for further shenanigans during the week to come. Ultimately, the posturing and positioning that is taking place is a waiting game to throw both bulls and bears into a tizzy prior to the next leg taking place. From a perspective purely rooted in the basics of price structure, the longer we continue carving out a flattish range around present levels, the more the possibility this turns into a continuation pattern for the primary trend. There is the issue of the earnings season quickly approaching, along with an end of July FOMC meeting. Both events will drive the intentions of the market over the next few weeks, as there will surely be attempts at dislodging positions prior to any profitable, sustained trend revealing itself. Continued chop remains the theme until further notice. Zenolytics Turning Points is 450+ 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...
How Can I Go Wrong?
The perception of the ease from which future gains in risk assets will be derived is making all-time highs along with the markets. For every concern that we had six months ago, that same concern has been replaced with sense of wonderment as to "how can I go wrong?" How can I go wrong buying when the Fed will inevitably ease rates at some point in the near future? How can I go wrong buying when even if we go into a recession it will be offset by more liquidity in the system? How can I go wrong buying when NVDA is doing nothing but going up, with the AI narrative creating exponential gains? How can I go wrong buying when inflation is no longer a concern? How can I go wrong buying when Trump is likely to win the election, creating a dream scenario for the US economy via lower rates and business friendly policies? How can I go wrong buying when the S&P is surely headed to 6000? How can I go wrong buying when China is injecting massive amounts of liquidity into the global financial system? How can I go wrong buying when the US economy is as resilient as it has been? How can I go wrong buying when even though rates have skyrocketed, the markets don't care? A near endless list of "how I can wrong?" This is in stark contrast to Q4 of last year when the list of everything that could go wrong was performing a perfectly executed camel clutch on the mind's of investors, rendering them unable to process the gains that were to come. Now let's be absolutely clear: Being a contrarian simply for being a swashbuckling, against the grain cowboy is peak plebeian behavior. This is not a contrarian call simply because everyone is now bullish. Price structure, leadership and negative divergences in cross asset correlations are confirming this on multiple levels that are only growing by the week. What is throwing everyone off, including bears who have the right idea but seem to be lacking in the ability to execute, is that we are up against ascending resistance levels. Meaning that new highs are more manipulative than would otherwise be the case. We remain rather heavily long crypto, crypto related equities, biotech and emerging markets. Short growth and mega-cap/mega-confidence trades. Certainly not a bearish portfolio mix, but nonetheless, more defensive than we have been in quite sometime. Tread light. Much can go wrong. Zenolytics Turning Points is 430+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our...
The Staggering Message Being Delivered By Gold
Those who have been wrong, will continue to be wrong. There is no middle ground in this market. It is a winner take all type of market cycle that will fail to provide any type of reversion to the mean typically associated with normal price environments. In fact, what gold is telling us more than anything else is not so much that WW3 will breakout tomorrow or that inflation is going to double digits by year end. Rather, what gold is telling investors is that asset volatility is set to go parabolic as those who hold assets seek reprieve from central bank policy gone wrong. The only place to be granted reprieve is through aggressive asset allocation in the two asset classes that have been ahead of the central bank devaluation curve for more than a decade: Crypto and Growth Stocks. The recent vertical move in gold is the market saying, "you think asset volatility in recent years has been dramatic, well you haven't seen anything yet." The direction of gold is telling investors that the assets will continue to inflate, whether crypto, growth equities, precious metals and to a lesser degree real estate. This weekend's 14 page note goes over the various scenarios involving the current technical structure of the market and how Q1 earnings to be released during the latter half of April play into the overall pattern. To a greater extent, taking a more zoomed out view, the targets for the major indices for the remainder of 2024 are anything but traditional or standard in scope. Rarefied air is the only description being fit. 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...