Here Is The Call For CPI Tomorrow
After getting into cash to begin last week, we reinitiated long exposure on the open this morning moving back to near 100% invested on a notional basis. In this Sunday's edition of Turning Points, I outlined our decision to again get long in a 16 page report. The reasons for switching from net short to net long are based on technical, sentiment and some macro reads on the market for this week. One of the primary dilemmas that bears face going into tomorrow's CPI is that investors have become overextended in their bond and USD positioning. Namely, too many investors fell for a cooked jobs report, expressing their renewed hawkish sentiment by selling bonds and buying USD. The good ol' inflation trade came back with a vengeance throughout last week. This sets up a real problem going into tomorrow for bears. Everything but a scorching hot CPI number (I put the probability of this at around 1%-2%) causes bond sellers and USD buyers to massively unwind the positions they built up last week. In the meantime, last weeks selling got the bears attention in equities, with short positions being built up again, while bulls have been sidelined going into the CPI. There are a million and one analysts parsing through the data to guess where CPI will come in tomorrow. Pinpointing the number through in depth fundamental analysis of every price point isn't what I do here. What matters going into these types of events more than anything else is the predominant allocation of capital among investors. These types of focused allocations represent holes in the dam that markets inherently break with overwhelming force. Tomorrow the markets will do what they like to do best: Take a sledgehammer to what everyone thought was the right allocation last week, starting with those betting on higher yields. Moving onto those betting on a higher USD. And naturally, bidding up equities as a result. Looking for another test of 4200 (4210-4220 to be exact) this week. Good luck tomorrow. 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...
Detailing Our Decision To Get In Cash or Net Short
For the first time since the September/October time period, Zenolytics portfolios have moved to a net short position. This is after being upwards of 200% long throughout the majority of January, taking advantage of primarily growth stocks with one crypto in particular (RNDR) giving us a 150% gain since August. We are out of everything, but a couple long-term crypto names. Our portfolio of growth stocks has done what it was meant to do. That is to produce a furious snap back rally, riding on the back of short sellers, investors who were forced to take exposure into the new year, and dreadfully misallocated portfolios that were built on fear of Q1 2023 being a replay of Q1 bear market action in 2001 and 2009, as two examples. During this past weekend I put out an 18 page report to clients with 17 charts detailing why, at a very minimum, it is time to be conservative with overall exposure to risk assets. There are a number of factors involved in completely flipping our exposure this quickly, some of which are macro based, but most of which are technically based. The bottom line is this: The markets are well behind schedule. I have been emphasizing in recent weeks that speed is of the essence moving forward. This from January 10th, with the SPX at 3900: This past Thursday we hit 4195 and reversed. The fact we are sitting around 4100 is now a problem. This is the same vicinity the S&P 500 was during Powell's now infamous Jackson Hole speech on August 26th, 2022. Two days before Powell spoke at Jackson Hole, the SPX was at nearly the exact same levels as prior to his speech tomorrow (today depending on where you are). We have made no progress despite an abundance of clarity with respect to inflation and the Fed since the August Jackson Hole speech. The markets are looking at something else. It's a guessing game right now as to what that is, with macro analysts coming up with everything from earnings to more rate hikes than anyone expects. We don't necessarily need to know exactly what the market is looking at to delay making substantial progress. The fact that the delay is taking place, while numerous rejections take place along key resistance points in all types of major averages is enough to step back. Investors must now demand clarity from price before further committing to a market that has seen a significant shift from extremely bearish to quite bullish in just a few weeks. On...
Weekly Note Preview: A Market Update & Two New Trades Initiated After Today’s Move
In this week's 323rd edition of Turning Points we have an 8 page note going over what the recent display of strength in the markets means looking out 1-2 weeks, along with two new trades, one in our short-term trading portfolio and one in our intermediate term swing trading portfolio. MARKET UPDATE The expected 25bp hike came today with an unexpectedly dovish Powell forcing investors to completely unwind the inflationary trade. This meant lower yields, lower dollar and higher prices for risk assets. This has been an impressive week in one way in particular. For all intents and purposes, the SPX should have tested the 4000 level this week. For all intents and purposes, the NDX should have tested the 11700-11800 level this week. The best the bears could do after a convincing reversal on Monday was 4015 on the SPX. What seems to be informed buyers conspicuously came into the market immediately on Tuesday following Monday's weakness, bidding up stocks, not even allowing the SPX to touch Monday's low. Tuesday's low was 4020. 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 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...
Here Is Where We Stand After Today’s Decline
Disbelief in this rally is running rampant. That disbelief, however, does not preclude the market from putting in days like today. We took off our leverage for the first time in quite awhile on the open, suspecting that this week would be a volatile one in both directions. That volatility gives rise to opportunity, which is why a cash position was necessary to capitalize on the events to come. The buy zone (highlighted in yellow below) should arrive by Wednesday, if the market decides to be so gracious as to afford investors the opportunity for another dip before heading up to 4200 on the S&P and 13000 on the NDX. Far too many traders are looking for a retest of the now infamous downtrend line from the 2022 highs. This makes the signal far less relevant than it would be otherwise. In fact, if the NDX does test 11450 this week then the bulls have a real problem on their hands going forward. I'll detail this further if it does occur, but for the time being it doesn't necessarily warrant discussion as it's a low probability scenario this week. At maximum, the downside from today is to the 11550-11750 level. This is your buy zone for the week. The more shallow the pullback from these levels, the higher the probability of catapult type action back up to 13000 within the next two weeks. A move to 11750, followed by a quick rebound back above 12000 would be ideal for the 13000 scenario to come to fruition into the middle of February. Watch your levels. More importantly, watch how the market treats these levels over the next few days as a signal for just how great the momentum on the upside will be in the days and weeks ahead. Goodnight. 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...
Weekly Note Preview: Why We Are Reducing Exposure After Being Nearly 200% Long For Much Of January
In this weekend's 322nd edition Turning Points we have a 12 page note detailing the reasons why we are reducing exposure after being nearly 200% long for much of January. MARKET UPDATE Given that we have both a big Fed week and a big earnings weeks, most anything I say here today will be largely irrelevant within a few days depending on how events shake out. Going into the events of this week, we are at a technical crossroad for the market where any further acceleration up can result in significant upside momentum developing for some weeks, blowing out all kinds of resistance areas. Our dilemma, of course, is that we are beholden to the events of this week to determine whether that becomes a reality or we see further delays along the path towards SPX 4200-4300, with an eventual destination of 4500 during Q1. What is noticeable is that investors are beginning to succumb to the emotional challenge of being sidelined while some terrific gains are taking place. These are the top gainers from my watchlist. It's rare you get so many equity names within a few weeks that are up so significantly. Fortunately, we have held or currently hold a handful of these. Irrespective of deeply ingrained bearish psychosis, remaining in cash while these types of gains are taking place is a difficult proposition for most. We are beginning to witness emotional upheaval expressed through price with increasing frequency, especially this past week. 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...
There Is A Change In The Air
I present you the ratio of Bitcoin to long-term yields: Risk went off at the flip of the calendar from 2021 to 2022 when yields signaled a choking off of liquidity relative to Bitcoin. As we recently flipped the calendar again, from 2022 to 2023, we get another signal. This time telling us that liquidity is returning to the financial markets as Bitcoin is rising relative to yields, breaking out of the downtrend from the 2021 high. Risk assets want to breathe. Targeting SPX 4200 and Bitcoin 29000 in the short-term. 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, 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...
The Silver Lining After Today’s Drop
Investors are frustrated, irrespective of their affiliations (bull or bear). And here is why it has become so frustrating for nearly everyone. This is technically driven slop. The technical nature of the market is on full display presently. "The lines" in this chart haven't moved to fit the market. The markets have moved to fit the lines. In other words, we are basically pinballing between important technical points until the market figures things out. The question everyone should be asking at this point is WHAT? What exactly is driving the market to become a technical zombie while it figures things out. Yields are falling. The USD uptrend has fully reversed. Market averages globally are doing relatively well, with some even hitting new all-time highs in recent weeks. The velocity of rate hikes is declining. The markets shouldn't be playing technical pinball right now. The only silver lining in all of this is that we can gather, with a great deal of confidence, is that once a break above the resistance areas that have been plaguing this market for many months takes place, a certain momentum should develop, at least for a time. Judging that momentum will be key to figuring out what takes place next. 4100-4200 on the SPX remains critical. 12000-12750 on the NDX also remains critical. Goodnight. 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...
Weekly Note Preview: Speed Is Of The Essence
Below is an excerpt from the 320th edition of Zenolytics Turning Points. This past week was right up there with our performance coming out of the March 2020 lows as well as some of the other major turning points over the past few years. Whereas during those turns we largely held onto positions, favoring a multi-month swing approach to trading, in the current climate it's critical to capture some of our profits until we get more technical clarity. Of course, we are still heavily long by any measure after taking off *** and ****. For that reason, I want to see technical clarity develop in the next couple of weeks, otherwise there will be further scaling back to around 100% long in the equity portfolio. What do I mean by technical clarity? You will see three separate highlights in the chart of the SPX above. The first green arrow from June of 2022 was when we fell into what I call no man's land. Ideally, the market would have been able to sustain the bottom end of the red band at around 3900. However, given the liquidity pressures brought on by the Fed, the market wanted a deeper reset tagging the enormous wall of support at the October lows, marked by the CPI reversal on October 13th. The full 12 page report is available to clients by visiting https://www.zenolytics.com/premium/ 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,...
NOBODY SEES THIS?
Let's get right to the point. Here is the chart of the S&P with a horizontal line connecting what is roughly the 4100 level since May: I can count on one hand the number of investors who are bullish down here. In other words, investors are, by and large, being played. Why? The markets are doing absolutely nothing, except throwing an exceptional temper tantrum that is causing investors to bend to the whims of whatever they are being told is true by what is basically the echo chamber of social media driven financial news and analysis. Post FOMC in early May we were basically at the same levels where we started this week. Following Powell's uber-hawkish middle finger to investors worldwide the S&P closed at basically the same levels where we started this week. And after Powell's uber-dovish loving embrace of investors, the S&P closed at 4080. A gigantic nothing burger of a market that has done nothing except increase sales of Xanax for an investor class that can't see the forest for the trees. It took just two days of persistent selling this week for investors to forget the markets are doing absolutely nothing down here, ignorantly coming up with price targets in the low 3000-high 2000 range for where the S&P will bottom sometime in Q1/Q2. This is a critical juncture. As with every critical juncture in the markets, there is an abundance of information that is nothing other than misinformation and noise that is nearly impossible to separate from facts. During times like this, the most basic of analysis, such as what I have presented above works. Markets have done nothing since May, while everyone has spiraled into a suicidal economic analysis depressive schizophrenia the likes of which I have rarely witnessed in more than 20 years trading. Upside remains extraordinary. Guard your eyes and ears. 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...
The Inflation Trade Is Being Unwound Before Your Eyes
Some monumental moves in two major assets classes today while equities consolidated yesterday's gains. USD Index (DXY): A confirmation of the change of the trend taking place here with a close below the 200 day moving average. This is the first time in 18 months that the DXY has closed below its 200 day moving average, as the chart below demonstrates. And to further lob a flaming bag of fresh turds at the doorstep of every bear out there, yields were also pummeled today in poetic fashion: I highlighted the importance of the trend break for yields when it occurred during Thanksgiving week. What we have now are layers upon layers of confirmation that the inflation trade is disintegrating before our eyes. Not only will equities continue to respond to this by moving up towards 4500 on the SPX by year end, but Powell will also be responding by laying off the rate hikes past February, at the absolute latest. The game has changed. Make sure you're changing with it. 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, 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...