Eye Off The Ball
Close to two months ago while the S&P 500 was still in the 4500 range, I published a note titled Throw Your 2021-2023 Playbook Out As We Have Entered A New Market Regime In that brief note, I described the misery that would plague investors who actually thought 2022-2023 was anything but a psychological reset driven by hyper aggressive interest rate policy that did not come anywhere close to having the dire outcome most of us expected. In fact, all that 2022-2023 did was to compress two wasted years into a secular bull market trend that is now seeking to unwind, as quickly as possible, the interest rate driven pessimism that has seen investors in a near perpetual state of misallocation, yet to be resolved to this day. There is a lot of work yet to be done in order to correct the ills of the past two years. That work will come in the form of persistent price movement that will continue to deny those who are looking for a retest of attractive levels the satisfaction of a decent entry. Bull markets don't work that way. Being forced to chase stocks is the path of least resistance. Now as the market approaches persistent new highs, investors continue to have their eye off the ball looking for local tops in an attempt to avoid a 5% pullback in the S&P 500 instead of understanding the breakout we just experienced is a beginning, not an end. This is a resumption of a secular bull trend that was only interrupted by an overanxious Fed in the face of deteriorating financial conditions brought on by rampant inflation. The rush to move to new highs in such a persistent manner since the late October low is all investors need to know about the degree of compression that took place in the face of hawkish Federal Reserve policy. Forget everything you think you know about the markets of the past few years. This is a different beast entirely. 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...
Throw Your 2021-2023 Playbook Out As We Have Entered A New Market Regime
Not sure that most investors truly grasp what has occurred during the month of November. Crypto and gold are screaming that there is chaos ahead, while large amounts of capital are making shifts unlike anything we have witnessed during the past couple of years. What this means, very simply, is that the playbook you have used to generate gains in the market over the past two years is in the process of being stomped on, shredded and burned right as most investors are still attempting to put 2 and 2 together. Cryptos move is not a fluke. In fact, we are increasing our allocation in both alternative spot and crypto related equities. Golds move is not a fluke. Signaling chaos, looser monetary policy and a stuck Fed for the first half of 2024. Equities sudden resurgence is not a fluke, telling investors that increased liquidity is searching for a home. Most importantly, investors are putting a premium on escape hatches from the current monetary system. That tells you everything about what to expect in 2024. All the correlations, resistance points and economic truths that you have understood to be true from 2021-2023 are no longer valid. Adapt or die. In this weekend's edition of Turning Points, I have put together an 18 page note on how to best allocate for the dramatic shifts we are in the midst of experiencing. Including increasing our alternative crypto and equity allocations. This is closer to a beginning than any conceivable end. Zenolytics Turning Points is 399 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...
Investors Should Indeed Be Afraid Of The Big Bad Wolf
Being subject to alarm is not something I do often, if ever, here at Zenolytics. In fact, if you are to pull up a chart of the SPX and look over every major correction during the past decade plus, accompanied by the analysis provided here (well over 1000 posts spanning 12 years) during each of those corrections, you will find that I was screaming "buy the dip" from 2011 onward. 2023 has been a different story, however. We came into 2023 heavily long, nearly 200% into the new year and through most of January, while everyone was tripping over themselves in a rabid panic: However, since February, the operational protocol around here has been either slightly above 100% invested, barely invested at all or net short. In other words, my unbridled lust for leveraged upside gains has been tempered by a market that is unusual, to say the least. The current character of the market, being as unusual as it is, begs the question: If the market is behaving in anomalous manner consistently, can we rely on what are seemingly reliable statistical studies to get us through the rest of the 2023, after the markets stalled out in late July? What I am referring to, of course, is the entitled investor class who believes they possess a birthright to a Q4 rally irrespective of circumstance, fundamental, technical or otherwise. While I know better than anyone how imbalanced the markets may seem from a sentiment standpoint, with recent options data, CTA allocations and pure panic as a result of yields spiking the way they have, there are points in time when contrarian sentiment fails. When it does fail, the markets put together moves that call into question everything you believe to be true about oversold readings, valuation analysis, sentiment and so on. Now, before I go any further, we are rather aggressively invested on the long side presently, with a 65% long allocation in just three hyper-aggressive growth names. By no means the leveraged positioning that we took on so many times in the past many years, but nonetheless, still bullish. Since the Twitter post above, we have seen a nice rally take place, with what is likely to be continued follow through in the days ahead. What should concern everyone is what happens past October. Let's dissect what lies ahead: CPI on Thursday - minimal cause for concern. Inflation data will remain tepid, being inline or below expectations. Earnings season starts on Friday with major banks reporting. More than likely an upside catalyst for banks, as higher rates...
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...
They Are All So Quick To Abandon Ship July 2023 Edition
In November of 2022 as investors were fortifying their concrete bunkers while buying 10 gallon buckets of powdered creamy chicken flavored rice awaiting the end of the world, I put out a note titled They Are All So Quick To Abandon Ship. At the time, this was a plea to investors to screw their heads back on straight, not falling victim to the bearish psychosis that had become endemic. Now here we are some 600 SPX points higher, and while investor sentiment is no longer suicidal, they are still So Quick To Abandon Ship. In this weekend's 361st edition of Zenolytics Turning Points, I outlined the case for taking our exposure back up to near 100% invested during the week ahead, after averaging this past week at roughly 50% invested, our lowest exposure in some weeks. Along with analysis of two new positions and the case for adding to our largest position, the following excerpt from this weekend's note cannot emphasized enough: Will a market that went so out of its way to deceive everyone into year end 2022 all the way through part of the first half of this year, suddenly turn into a charity case, rendering all of its efforts null and void? When looking back at 2022 – early 2023 some years from now, we will confidently be able to say that it was one of the most deceptive market moves you will find during a secular bull market. Against this frame of reference, knowing what we know about the 100 year history of secular bull markets as I've presented in my recent notes, while also understanding that the degree of effort the market puts into a deceptive result is directly proportional to the degree of output yielded as a result of the deceptive effort, a significant pullback for the rest of 2023 becomes a very low probability event. It's not a matter of analyzing a market based on recent performance, then coming to the conclusion that being the market has moved up so far in so short a period a pullback must be due. Rather, it is a matter of analyzing a market based on context and effort. The effort expended to gather the hearts and minds of investors into expecting a certain outcome, tells you more about the markets future intentions than most anything else. Additionally, understanding the context of where the market is in its largest cycle, tells you the timing of the move. 2022 was such a monstrous anomaly that every investor should do themselves the favor of understanding that the swing of the pendulum forward will be of equal if not...
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...
The Bullish Technical Data Point That Few Are Discussing After Today
VIX annihilated investors from morning until close, reversing nearly all of its gains throughout the trading day. Yields look climactic, setting up for a short-term reversal back down, at the very least. Equities are holding their former key resistance that is now acting as support. In the midst of this, perhaps distracted by memories of past follies, there is an extremely bullish technical data point that absolutely nobody is discussing after today: Looking at today's series of events, we now know that yields can surge, the VIX can explode, while equities solidly hold onto key support levels that formerly acted as resistance. While most everyone else is panic stricken at the first sign of weakness, walk into tomorrow's job report confidently knowing that today's market already told you how tomorrow will fare. This market is carving out a new base from which the SPX will likely move up to 4650-4700. The fervent apologists, chronic pessimists and dogged doubters amongst us are, once again, focused on the wrong price levels and data. We will be looking to increase our positioning, as we have been for some weeks now, moving into a leveraged long position by early next week. This bull market is a different beast. Treat it as such. Zenolytics Turning Points is 300+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues posted herein with a professional advisor of his or her choosing. Information throughout this site, whether stock quotes, charts, articles,...
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...
Are Investors About To Enter Valhalla?
When we last left off, I discussed the week of June 12th marking a short-term high for the SPX after coming eye to eye with key resistance at 4350. With the SPX putting in its worst weekly performance since early March this past week, it's fair to say that we are seeing the response I expected to this resistance level which now allows investors to judge the health of the markets after this recent runup, along with the potential for further gains. In the same note I referenced above, I discussed the first week of July being the time to pounce on the long side after the coming pullback. In the 354th edition of Turning Points this weekend I discussed the signals the market is sending following this recent pullback, along with why those signals are dictating increased long exposure into the middle of July, at the very least. The current consolidation at resistance is like nothing we have seen since the peak in late 2021/early 2022. In fact, this past week was such a data driven technical bonanza for the bulls that it's not entirely outrageous to say that a vertical ascent could take place into earnings season. The fear of missing out that will develop into early Q3 as investors fear a replay of their Q2 brain fart to remain short or in cash way longer than they should will be reason enough for a flamethrower to ignite the fuse of the market during what is a seasonally favorable period into mid-July. Unfortunately for such a large number of investors, one of my final tweets for 2022 still holds true, even after this recent runup. The other reason investors will be frothing at the mouth after stocks as we kick off Q3 is that Q1 earnings delivered such spectacular results that within a generation of front-runners, there will be a cold, hard sprint to get ahead of the next man to buy some stock prior to Q2 earnings being released. So essentially we have the perfect combination of technical, seasonal and event driven factors coming into fruition as we close out Q2 and enter Q3. Levering up with a mix of small-cap and large-cap names in the days ahead. 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...