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 All the correlations, resistance points and economic truths that you have understood to be true from 2021-2023 are no longer valid.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...
Weekly Note Preview: Gaming The CPI
In this weekend's 375th edition of Turning Points we have an 11 page note focused primarily on gaming this week's CPI report as the markets remain around key levels. What follows is a brief preview from this weekend's note: There are a lot of ways to lose money in this market. In going through the charts this weekend, this single fact jumped out more than any other. Investors are increasingly concentrated in just a few names. They also tend to gravitate towards the best performing sectors, whether real estate related, energy or otherwise. This leaves an enormous number of names that are essentially left for dead, delivering glimmers of hope at random intervals, while persistently grinding towards below average return territory. 2023 has been a year where it has paid to do two things specifically: 1. Be extremely selective about which names and sectors in which you are invested. Being that losing money in this market is such a readily available feature, being diversified is only a ticket towards bringing one closer to performance mediocrity. 2. Maneuver allocations in short-term intervals so as to avoid seemingly random drawdowns like what the markets have faced since the July highs and what they faced previously, at the February peak to the March low. Normally, in a standard bull market, you want to ride out the peaks and valleys, as you do not want to be shaken out of your positions. Also, you want to be diversified as bull markets typically have a “rising tide lifts all boats” effect. 2023 is something different, however. As anomalous as this market has become, despite the fact that there is some certainty given the understanding of long-term bull market cycles, it wouldn't at all be surprising for this market to deliver downside that could be punishing in nature due to the overall slippery conditions we find ourselves facing. With that said, it remains extremely important to bear in mind that being selective about where we are invested and continuing to maneuver around potential trouble spots has and will continue to work, potentially insulating us from anomalous circumstances involving sudden downside in the markets during the time ahead. To view the entirety of this weekend's note, you can subscribe by clicking here. 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...
Weekly Note Preview: There Is Some Short-Term Uncertainty, However, Given How, When & Where The Markets Are Consolidating, The Next Steps Will Be Abundantly Clear In The Time To Come
In this weekend's 373rd edition of Turning Points we have a 13 page note discussing how short-term uncertainty is set to turn into absolute clarity for the remainder of 2023. What follows is a brief preview from this weekend's note: We find ourselves, once again, in one of those spots where our next steps will be abundantly clear due to the nature of how, when and where the markets are consolidating. However, until we observe how the current situation develops, jumping to premature conclusions about the future direction of the markets will be a sub-optimal use of capital, with what are likely disappointing results. The current market has the look and feel of one that would be content to chop around for the next week or two, at least. In that situation, we want to be buying the dips, in a handful of reliable squeeze candidates in order to play the upside. Over the intermediate term, past the middle of September into the beginning of Q4, the pressing desire of portfolio managers to make up for performance lag during 2023 to date will certainly be a catalyst for renewed upside momentum in the markets. What will also be a catalyst is the Fed pausing at the September meeting, which is currently looking like a high probability bet according to Fed Fund futures. To view the entirety of this weekend's note, you can subscribe by clicking here. 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...
Intra-Week Note Preview: A Discussion On The Importance Of What Occurred Today In The Markets, Along With How To Approach Equity Allocations From This Point Forward
In today's 372nd edition of Turning Points we have a an 8 page note discussing the importance of what occurred today in the markets, along with how to approach equity allocations from this point forward. What follows is a brief preview from today's note: Today was an important day for a number of reasons as I will get to in the charts to come. Our original intention in taking on long exposure last week was to gain a leg up on the market by buying seemingly risky names when uncertainty was at its greatest. This allows us to get ahead of the market by having a profit cushion from which we can either simply take the profits off the table or add positions to the portfolio while not being in a vulnerable position should the market reverse. Coming into this week, I had Tuesday and Wednesday achieving the bulk of the gains, with the intention of taking profits on Wednesday, taking a wait and see approach to the markets from there. However, today's price action is the first day since the August 18th bottom that the market is actually telling us, with some certainty, that the bottom in mid-August could be the low for the remainder of the year. To view the entirety of today's note, you can subscribe by clicking here. 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...
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...
Weekly Note Preview: A Discussion Of Exactly Where We Are In the Current Secular Bull Market Cycle And What It Means For Investors During The Months Ahead
In this weekend's 359th edition of Turning Points we have a an 11 page note discussing exactly where we are in the current long-term secular bull market cycle, how previous secular bull and bear markets tell us what to expect with the current run, and how to best invest for what is ahead. What follows is a brief preview from this weekend's note: Scenario 2 is coming to pass. This means that given the fact that an anomalous decline occurred in 2022 during a liquidity filled monetary environment as we approach the middle stages of a secular bull market, the makeup trade that occurs is going to be formidable, to say the least. Everything is at the markets back from here: We have the middle stage (acceleration stage) of a secular bull. We have a deceptive enough decline that nearly everyone got shaken out. We have rampant liquidity remaining in the economic system looking for a home. We have all-time highs in the major indices that are yet to be exceeded, acting as both a a point of attraction and upside catapult once they are exceeded. We have psychology that has completely shifted from where it was 18 months ago at the market peak. We have a Fed with an ever diminishing role in the market. We have an anomalous decline in 2022 that the markets will violently makeup for. We have a theme in AI that will function as the fundamental narrative to drive prices. The fact that we have the AI revolution occurring as we enter the middle stages of the secular bull market also lines up well with the psychology as we entered the middle stages of the 1982-2000 secular bull market, with the internet boom occurring during the middle to late stages. Whether technological revolutions occurring as price begins to truly heat up is a symptom of speculation or a feature of the cycle at work is up for debate. To view the entirety of this weekend's note, you can subscribe by clicking here. 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...
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,...