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...
When We Last Left Off…..
When we last left off, the market was in the process of manipulating investors into a series of incorrect, neutral/bearish positions prior to the FOMC decision this past Wednesday. This weekend's edition of Zenolytics Turning Points goes over in detail what is possibly one of the better setups of the year, with multiple key indices and mega-cap tech names all lining up for a powerful move in the coming weeks. In addition to this, the psychology of this uptrend continues to be warped, at best. Put as simply as possible, a vast majority of investors missed out on what was one of the greatest layups in buying risk assets, whether equities or crypto, during Q4 of last year. They completely whiffed on getting allocated during early to mid Q1. And now they find themselves sitting on a street corner bucket debating their future as largely irrelevant members of a capitalist society that continues to frown on group think, as it always has. We are at the very early stages in a resumption of a secular equity bull market that started in early 2010s. Go back and read my posts from 2011 talking about one of the greatest bull markets ever - a supercycle as I coined it then - taking shape when everyone was still jaded from 2008-2009. This trend to the upside will continue until the early 2030s according to the secular bull market cycle. In fact, history tells us that the most profitable portion of a secular bull market is during the latter stages, which will take place from 2025 onward. Tune out 99% of what you think is true about the markets and the economy in early 2024. The bullish case couldn't be clearer, despite the wall or worry that continues to haunt investors well past a point that is reasonable. 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...
Market Manipulation At Its Finest
Last week was one thing. We knew it was going to be bearish, acting accordingly by bringing down our equity exposure to levels not seen since Q3 of last year. In fact, we put on a small index short position that was covered this morning for a minuscule profit. However, now with the Fed meeting a short time away, the market is doing its utmost to manipulate investors into a position of confusion, disallowing any firm commitment in either direction. What became clear with the market action to close out last week was that the bears failed to capitalize on a number of catalysts, both technical and fundamental, that should have allowed them to string together much more significant losses than the near flat performance in the SPX. The giveaway that the market is in manipulation mode came with the big gap this morning that served as bait for bears, who love to short large gaps on thin volume. Now we are getting what is seemingly a confirmation in the overnight session, with risk assets declining, led by crypto. Yet another attempt at baiting bears and tepid longs into making sub-optimal decisions into the FOMC. Expect this trend of manipulation at its finest to continue through Wednesday. I expect that by Thursday the market will reveal its hand, demonstrating a firm commitment towards further upside, with a high probability of NDX 18400 being taken out to close the week. If you are trading in the markets and you don't know who the sucker is, then you are the sucker. Fortunately, we have spotted the suckers. Behave accordingly. 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...
The Next Leg
As we are now roughly four months into this rally, a recognition needs to take place of a leveling up in the difficulty of extracting gains from this market. November - March was relatively easy. The opportunities have been boundless, from NVDA to crypto, in this relatively narrow bull market, it simply took a recognition that momentum was working and every other piece of analysis offered up offers little value, whether macro related, fundamental valuation analysis or otherwise. Save your moral hazard based, overly intellectualized bearish arguments for college economics class, as the only thing that matters in the markets is capturing gains while they are available. With that said, it is important to understand that with the easy money more than likely behind us, there will be numerous curve balls to come during Q2, as we quickly approach April. It begins with the Fed next week, with what is likely to be a continued resurgence in inflation as PPI will show tomorrow, and as a result Powell getting caught between a rock and a hard place, having to walk back, ever so slightly, his recent dovish stance. The market is not prepared for even the slightest hawkish results out of the Fed next week. There are no hedges. The bears have largely been forced to capitulate. In other words, there is a lot of hollow ground beneath the market should things begin to turn sour. Ultimately, any weakness will more than likely be a buying opportunity for those with dry powder. Our current allocation here at Zenolytics allows us the luxury to take advantage of what is likely a difficult period ahead, while nearly everyone is expecting smooth sailing a la November - March. The game is going to change in Q2. We are about to get an early preview of the changes to come during the second half of March. Strap in. 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...
Where And What To Look For In The Days And Weeks Ahead
A little over an hour ago I delivered to clients this weekend's edition of Turning Points. In it we have 16 pages of technical data reviewing the importance of what occurred this past week, not just in the Nasdaq, but also key individual names and ETFs. There are times in a market trend where everything comes together in an undeniable and overwhelming fashion. This past week was a text book example of such an occurrence. As a result, we have taken down net exposure to levels not seen since Q3 of last year. At the same time, an interesting divergence is taking place in risk assets as crypto continues to garner investor attention, with increasing focus on alternative crypto names. The overall trend remains in its infant stages, as Bitcoin is just beginning to flirt with new all-time highs, while other key tokens are still some ways away from new highs. Most alt names have yet to make a move at all. Over the next 12-18 months, an inordinate amount of investor attention will be driven towards crypto due to the expansion in market caps taking place, further solidifying crypto as a major asset class with opportunities far beyond just Bitcoin. This bullish view on crypto isn't something new around here either. In fact, I have been discussing this since October of last year, when we were buying MSTR in the 300 range and subsequently, ETHE in the mid-teens. While we continue to trade in Bitcoin and ETH related names, the greatest gains for investors will come from discovering well placed alternative crypto names that have potential in excess of 10x. You cannot trade around the volatility in these names, which is why we choose to take positions and simply sit on them for the duration of the cycle. In the case of both equities and crypto, the focus of investors should remain on finding opportunities to increase bullish exposure. We have plenty of firepower to increase exposure to equities in the days and weeks ahead. Certainly looking forward to what are sure to be many new opportunities presented throughout whatever volatility the market decides to give us in the time to come. 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...
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...