Weekly Note Preview: After A Brief Hibernation In Cash, An Edge Has Emerged
In this weekend's 296th edition of Turning Points we go over 12 charts pointing to a clear edge for traders in the week ahead. After managing to avoid one of the worst weeks for the market in 2022 by sitting in cash, the question naturally arises if risk/reward has become advantageous enough to deploy some funds during the week ahead? Following Tuesday's CPI and the immediate massive selloff that followed, the bearish camp had everything needed at their disposal to make a statement, laying waste to the 3900 level for the month of September. To view the entirety of this weekend's note, you can subscribe by clicking here. 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 information providers nor we shall be liable for any errors or inaccuracies, regardless of cause, or the lack of timeliness of, or for any delay or interruption in, the transmission thereof to the user. With respect to information regarding financial performance, nothing on this website should be interpreted as a statement or implication that past results are an indication of future...
Investors Are Dealing With A Whole New Set Of Variables
The August high in the S&P should have never occurred. The market had all the momentum necessary to move up beyond some relatively trivial resistance levels, making its move to 4500ish. The fact that it did occur, slicing its way through every conceivable support level and marker on its way down to 3900 in a relatively short amount of time was the first indication that something wasn't right. Now we are beginning to catch glimpses of what the problem might be. Inflation isn't where any of us would like it, least of which the Fed. A 100 basis point hike is on the table for next week after today's CPI. Perhaps more jarringly, there is chatter now that a 4% target Fed Funds rate might not be enough. Let me say that again...a 4% Fed Funds rate isn't enough, meaning the target rate may end up being much higher. Further meaning that we don't know when this ends. And this is why we are in the situation we find ourselves in today more than anything else. Markets hate not knowing. As of today, there is a whole lot more that we don't know about the Fed, interest rate and inflation moving forward than a week, a month or even two months ago. You can see how well the market cleared resistance during August only to fail miserably into September. Now we have our wheels spinning in the mud, with the ultimate threat of running out of gas and seeing the markets make another leg lower over the next few weeks. This is a sloppy area. It's an area where excessive risk makes no sense, as there is a possibility for some real downside given the time of year and general environment we find ourselves in. We remain in cash. Looking to buy lower...perhaps significantly so. 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...
A Late Month Correction That Just Did All Of September’s Work In A Week
The September correction that acted as a beacon in the dark for a despondent population of bears has occurred in August. As a result, not only are investors afraid of their own shadows, but they have also become psychologically handicapped by everything from the perceived technical formations that are ominous in nature to seasonality and of course, the ever present spider demon that is Jerome Powell. The wall of worry that has been so prominent morphed into an avalanche of late. In the meantime, if you step back for just a brief moment, in an attempt, however futile, to shut off all the noise, nothing has changed. We are nearing the end of the tightening cycle The economy, while faltering, will avoid a recession in 2022 Yields are calling Powell a liar The US Dollar is putting in a compelling top of some significance Commodities have already melted down, with the exception of oil that is also putting in a topping pattern of some significance Pessimism is rife, with the put/call ratio closing near the June highs today Positive divergences abound in both volume and price What this all adds up to is a flip of the script, and with that a flip of the calendar, as well. September is shaping up to be quite a bit different than the past two Septembers that had the market falling significantly, with both 2020 & 2021 down around 4% for the S&P. All Powell did on on Friday was to push forward a correction that the market seemed eager to make prior to everyone catching onto another September swoon. As a result, Powell was used as a crutch to complete the September correction during August. Where does that leave September? In all probability, quite a bit stronger than most anyone suspects. In the Zenolytics portfolio we have recently increased risk in some high beta names that are further up the risk curve, in preparation for further upside. The target for September is 4400-4500, which I am expecting to get hit fairly quickly in the weeks ahead. Markets move while nobody is looking, and especially when nobody is positioned for it. Here we are again, another chance to be absurdly long that nearly everyone will miss. Goodnight. 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...
Something Happened On The Way To 4400
Let's review. With the SPX at 3900 on July 7th: SPX closed July at 4130. Then on July 27th with the SPX at 4000: SPX hit a high of 4325 this week, falling 25 points short of the lower end of the target for August. However, I must say, this is the first week in quite awhile where the price action deviated significantly from what I expected. This has some significance. My initial takeaway is that I have underestimated the bearishness that remains in the market. More specifically, going into Powell at Jackson Hole later this week, investors are taking the same line as they did going into the late July Fed meeting. They sold into the late July Fed meeting as paranoia and terror continue to reign supreme after the massive display of wealth destruction during the first half of 2022. Something else I may have missed that was a significant AHA! moment this past week was that the past two Septembers the market sold off significantly after rallying through August. A weak September has become programmed into the mental framework of price action models. We have just seen some front running taking place of BOTH Powell this coming week and perceived September weakness. The fact that investors feel the need to front run to the perceived downside of Powell remaining hawkish or not being dovish enough tells you just how jaded investors have become of the Fed. The fact that investors think that with this level of bearish sentiment, the markets will simply be a replay of the past two Septembers tells you the preprogramming of investors taking place in 2022 is highly exploitable. I expect the market to continue to take advantage of this persistent bearish mental framework all the way to new highs for all the major market averages. So, yes...something did happen on the way to S&P 4400. As a result, the September target becomes 4500+. Packed week. Let's go. 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 Lay Of The Land As We Head Into A Big OPEX
Heading into a big OPEX here is where we stand: There is a gap below 4177 on the S&P that every technician is eyeing There is the 200 day moving average at 4323 that every investor is eyeing There is the fact that the market topped this week exactly at the 200 day moving average that has every investor thinking "top!" Today was the lightest volume day of the year, creating the false perception that light volume is a bearish signal, when it is, in fact, very bullish We have a $2 trillion OPEX (option expiration) taking place tomorrow Every single one of the above mentioned lays of the land are an excuse for investors to sell. This is in addition to the gigantic wall of worry I've detailed countless times here in weeks and months past. Despite these seemingly worrisome facts, we just had the lightest volume day of the year. There is no liquidity in a move lower. Why? The selling has already taken place from January-June. Markets gravitate towards liquidity. That liquidity in the market is from higher levels, as shorts cover, cash is deployed and investors add to their lackadaisical equity allocations. The next big move is higher as the market seeks out that liquidity in the days and weeks ahead. Plan accordingly. Goodnight. 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...
It Is The Talk Of The Town….
Let's think clearly just for a second tonight. We are in the midst of one of the most hated rallies of the past couple decades. A rally that investors are only too eager to sell, liquidate into or not participate in at all due to the gigantic wall of worry that exists. Now we find ourselves at one of the most obvious resistance points that is outlined thoroughly in every textbook on technical analysis, as well as countless pieces of traditional financial analysis in whatever form they may take. That is the 200 day moving average, of course. Tonight it's the talk of Wall Street as the S&P was initially repelled at this level today. Back to the thinking clearly part. The most hated rally in a very long time meets the most traditional of resistance points that everybody knows and talks about in their analysis. Bearish bias being what it is very simply translates to this level being yet another excuse for investors to sell, which they obviously did initially judging by today's market action. The probability of the 200 day moving average being the top to a rally this hated is about the same as me waking up tomorrow morning and being able to dunk over Lebron James. In other words, damn near zero. Actually, it's exactly zero to be precise. Let's say the market decides to get extraordinarily nefarious, feigning respect for this resistance level and moving down. The eventuality over the very short-term is a parabolic move well above it as too many investors would be triggered to sell. We therefore run into the exact same dilemma we faced last week, the week before and the week before that. Everyone that wants to sell already has or will on any move lower. With that said, the only way to bring those sellers, skeptics and cynics back into the market, whether through covering their shorts or getting long is to blowout well above the 200 day moving average in a parabolic move that causes them to question everything they thought as tangible macro-economic reality in 2022. And that is what we are setting up to do after today's close. Violently I should add. Enjoy the ride. 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...
While Everyone Is Screaming For A Market Top, This Is Happening….
It is perhaps a sign of the times we find ourselves in that instead of seeking to profit from this rally on the upside, investors are instead choosing to play the "where is top to this rally" game. Of course, who can blame them really? Psychologically it is much more comforting to trade in the direction of popular perception and narratives that have become mantras to the masses. "I'm short, underinvested or fully in cash because of a recession, inflation, China, government, food shortages, mass unrest, earnings weakness, Russia, Ukraine, consumer debt...and the list goes on." This is called a wall of worry. Markets climb them. So while everyone is screaming for a market top being imminent, we have the following: ARKK is preparing to breakout TSLA is approaching $1000, in preparation for some key psychological reconditioning as it retakes the $1000 level and causes some degree of speculative euphoria XBI is consolidating beautifully at its 200 day moving average in preparation for a further extension up The SPX and Nasdaq are both approaching their 200 day moving average, in what will likely be an overshoot of these levels as investors are still too eager to sell perceived resistance. The signals are all there. This market is setting up for an even more significant move forward that will use all of the above mentioned factors as levers to cause all the holdouts, whether bearish or otherwise, to reverse position, grab their shorts (no pun intended) and throw everything they have at the market. The setup is as clear as day. The only question remaining is whether you are on the right or wrong side of it. 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...
Weekly Note Preview: A 16 Page Report On The Roadmap For The Remainder Of August; 3 Crypto Names Exhibiting Significant Accumulation Along With Perfect Patterns; A Small-Cap Tech Stock To Invest In As Investors Move Up The Risk Curve
What follows is an excerpt from this weekend's 286th Edition of Zenolytics Turning Points. To become a client of Zenolytics Turning Points or to learn more click here. I want to start by revisiting the framework for this rally I discussed in the 283rd edition of Turning Points on July 31st. We are now at the halfway point for August. If you will recall, I had August as being a nearly vertical ascent, with the ultimate target for the S&P being 4400. As we are at the halfway point of August, the S&P is almost exactly at the halfway point of meeting that target. The vertical ascent I expected has taken more of a violent path, where threats of a lower market cause investors to panic instantly, followed by big gaps up that cause those same investors to miss the next move. In any case, we are on track for 4400 as we move into the final two weeks of trading for August. Future expectations for the remainder of this month have to be constructed around the Jackson Hole meeting. This will be the equivalent of the Powell presser following the Fed decision in terms of overall influence on the market and short-term direction following Powell's comments. As a refresher, while Fed governors must play the role of good cops against inflation, remaining vigilant and steadfast in the face of rising prices, Powell must play to the political establishment, especially as elections are nearing. This means that his soldiers (good inflation cops) go out and do the dirty work of scaring the markets, while Powell (bad inflation cop) himself strikes a much more dovish tone to offset their hawkishness, creating the proper balance for the markets, while alleviating the worries of the political establishment who are concerned that he will tank the economy and the markets right into election day, costing them their jobs and control of government. If we expect Powell to be a bullish force for the markets on August 25th – August 27th , then we must also attempt to figure out how the market will do the most obvious thing (go up) in the least obvious way leading up to Jackson Hole. To view the entirety of this weekend's note, you can subscribe by clicking here. 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....
Here Is Why You Are Not Bullish Enough
While nearly everyone is looking for an excuse to sell, coming up with ridiculously low targets for the upside from here before the market tops, there is an interesting technical development taking place that deserves the attention of every investor. Before we get to the development itself, it's important to know that risk moves in waves. Put as simply as possible," risk on" moves sequentially from conservative risk, to mild risk, to real risk, to insane "mortgage the house" risk. You know the phase of "risk on" we are in by what assets move the most. As it stands now, I'm seeing the more aggressive "risk on" names in both equities and crytpo consolidating along their bases in a move up that is yet to occur. What this tells me is that aggressive investors have yet to bite into this market. In fact, they aren't even close according to the patterns that are emerging in the market. ARKK is the most obvious example of this: This isn't an extension in price. This isn't euphoria. This isn't even embracing the current rally. This is a continued base that has yet to attract the attention of investors. This is far from aggressive risk taking. In fact, it's the bubbling of "risk on" developing beneath the surface of the market. For the record, we've been long ARKK in the Zenolytics portfolio since the mid-3o range, taking the position in mid-June. When we took the position I was confident in the outcome being exponential in nature. What I am surprised by two months into the trade is how long it is taking for investors to catch on. Far from being a negative aspect of the trade, this is in fact monstrously bullish, as the upside remains significant for speculative assets, with no signs whatsoever of froth. With that said, time to up the risk, by taking positions in mild risk - "mortgage the house" type of risk assets before the herd catches on. I expect them to come in droves over the next few months, at which point, we'll begin taking some profits off the table. Working on the weekly Turning Points note now going over these ideas. Will be released tomorrow. The bottom line: You're not bullish enough. 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...
The Trap & The Truth
Bearish investors are about to experience their Teddy KGB moment, as the trap set over the past two days has been sprung. What follows should be an absolutely torrid pace of gains not just today, but throughout next week. Allow me to explain the trap. Here is the SPX prior to today's open. Two pieces of bait laid out for investors to either sell or get short. The first piece of bait was the gap up on Wednesday. Technical traders, of which nearly everyone is on Wall Street nowadays, are prone to the erroneous belief that every gap must be retraced in an expeditious fashion. Throw in the fact that the natural tendency is towards bearishness in this current environment and nearly everyone falls for the good ol' gap retrace play. Will this gap retrace? In all likelihood, yes. I have a good idea of when it will happen, but we are a ways away from that point in both time and price presently. The second piece of bait was yesterday's reversal, which served two purposes. The reversal in and of itself made the price structure of the market into Friday seem weak. But what it also did was to magnify the gap from Wednesday, making it an obvious point of interest for bearish investors who are all too eager to pounce. And with two traps laid in two days we have everything in place that we need for trend day up today. This means the market should close at or near its highs for the day today and for the week, as investors, once again, remain either underallocated, misallocated or downright ignorant in the face of a rally whose sole mission is to take advantage of the psychological handicaps that have been constructed over the past six months. Next week is setting up to continue the uptrend in what will be a stunning fashion. 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...