Today Was By No Means A Fluke
For two months how I have been feverishly bullish on stocks, discussing new all-time highs by the middle of January in early December when very few thought such a move was possible. When in mid-January we hit the 4850-4900 target I had outlined in the months prior, immediately my focus shifted to the NDX 18000 level as the next test for the market. Then yesterday prior to today's CPI release, I said very specifically do not take Monday's reversal at 18000 lightly. That reversal was a very early recognition move by the market that was spot on at a very precise target. The very first signs of smoke where there is now a fire. Here is the tweet from Monday: Now as we sit with a significant reversal taking place at a resistance area that has been treacherous for the markets going back more than 14 years, I want to again emphasize that investors should not be dismissive of the bearish signals that are suddenly beginning to pile up. While I expect the markets to be much higher by the middle of this year, from now into the end of Q1 has the potential to be a treacherous affair. We all came into this year expecting rate cuts. We all came into this year expecting to put the Fed on the back burner by spring, instead focusing on good earnings, a relatively healthy economy and several technology themes driving momentum. Instead, after today, we are again mired in the Fed watch doldrums. We have to mince what Powell says. We have to pay attention to Fed governor speeches. We have to wait for critical economic data before the market is given permission to choose a side. Earnings are behind us and now this is what lies ahead until what is more than likely the late March Fed meeting. Until then cash levels should be high. This is a bull market so risk should not be shunned completely, but it needs to be managed. We sold all of our growth names on Monday, with the exception of a single small-cap name. Currently sitting on our largest cash position in months. Content to wait this out, knowing that a buying opportunity will come, allowing for some outstanding gains if one chooses to be patient. Let's see how this all shakes out before recommitting. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and...
Tomorrow’s CPI Is Not So Cut And Dry
Tomorrow's CPI is not so cut and dry. This isn't so much a contrarian view as it is a study of the dynamics taking place in the markets prior to the CPI release. Most obvious of which is the fact that bonds have developed the penchant for persistent weakness irrespective of economic data. All this is taking place, by the way, as numerous inflation gauges tell us that inflation is, at least temporarily, a relic of years past. Even in the days leading up to the CPI release, when you would expect bond shorts to cover some of their exposure ahead of the data tomorrow morning, not a peep. They are simply sitting tight with yields steadily moving up over the past several trading days into the report. It is strange, to say the least. It is easy to be dismissive of this signal, expecting that "bond investors will get it, don't worry." When taking into account that we are witnessing this type of rate divergence, paired with the NDX hitting a key resistance level at 18000 that I have been discussing for weeks now, promptly reversing today's gain right off of resistance, then you should expect market shenanigans are around the corner. We have taken preventive measures so as to be much less exposed to any shenanigans moving forward. The second half of February deserves some caution. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC. Visitors should discuss the personal applicability of the specific products, services, strategies, or issues...
Some Observations
Numerous stats about the lack of broad market participation are making their rounds. What this tells us more than anything else is that making money in this market remains hard. It also tells us that investors continue to give the cold shoulder to everything but a handful of momentum driven names. What this data DOES NOT tell you is that a market collapse is imminent. Doing less in a bull market works. Thinking less works even better. There are a million and one supposedly bearish data points that will come across your screen daily for the next couple of years. You can then point your finger and say, "see, there is the market top, we can't go up much more with this happening." Markets will keep climbing that wall of worry. Do not be part of the wall. Crypto market caps, especially in the alternative space, look like they are about soar. The only requirement? Patience. Pick a few names that have potential and ignore the price fluctuations. Given the overall volatility, timing moves in crypto is for the birds. You want to take positions at the beginning of an up cycle and sell sometime during the middle of the cycle. What will catch most investors off guard about the coming crypto cycle is that it will be higher for longer, to borrow a term from Fed heads. Meaning that in this go round crypto will move more gradually than it has in previous cycles, with the bull trend moving well in 2025, possibly into 2026 before maturing. The reason markets refuse to go down is because they are front running the Fed being behind the curve on their sub 2% inflationary target already being met. The CPI next week will cement this. If you are looking for a top, look towards the latter half of this month sometime after NVDA's earnings. Given the nature of the run we have had, markets continue to consolidate wonderfully, with what looks like the next leg up being imminent. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of...
After Moving Through The Shock Stage, We Have Now Entered The Awe Stage Of The Rally
It wasn't long ago that the thought of the S&P 500 at 5000 was a mere fantasy for investors. Bogged down by two straight years of everything from recessionary fears to avoiding the grey haired grim reaper (nickname Powell), investors came to see each and every rally as a selling opportunity, clinging to the 2022-2023 playbook they had become all too comfortable with. It was at the beginning of December that it became apparent the markets had a different set of ideas, making it clear to those who understood the significance of the price action at the time that this rally was indeed different. The resistance points of the past were no longer valid. More importantly, the playbook of 2022 and 2023 was now a liability instead of an asset. The market was about to embark on a shock mission that it has now completed. With impressive earnings after the close from META and AMZN, along with the final resistance of the SPX about to fall, while the key NDX 18000 level acts as a magnet above, the awe stage of the rally is set to begin. While the shock stage was a two month affair, the awe stage will be much more short lived. While the shock stage had multiple twists and turns along the way, the awe stage will be vertical. Expect the SPX 5000 level and the NDX 18000 level to be key points in this journey. Those who have not capitulated to the long side to date will be forced to do so during the days ahead. Their capitulation is your signal to raise cash. While the simplicity of buy and hold was the most efficient form of operation over the past few months, this will more than likely change during February and March. The opportunity to outperform will come in buying high percentage patterns that take place after the volatility subsides. The rest of Q1 will be a game of cat and mouse. Make sure you are on the right side of the hunt. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be...
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...
Weekly Note Preview: The Evolution Of Perfect Price Structure In The Major Indices; Investor Embrace Of Pessimism At First Sign Of Trouble; Timing A Short-Term Peak; Catalysts In The Week Ahead; A New Aggressive Bull Position; Crypto Strategy
In this weekend's 409th edition of Turning Points we have an 11 page note discussing the continued perfect price structure taking place in the major indices; investors embracing pessimism at the first sign of danger; timing of a short-term peak; macro and micro catalysts in the week ahead; a new Aggressive Bull portfolio position; crypto strategy for the months ahead. What follows is a brief preview from this weekend's note: In the midst of perpetual doubt brought on by the grief suffered at the hands of sadistic market action from January 2022 all the way until October 2023, the markets have spontaneously put together one of the greatest rallies in history. Despite the markets vehemently expressing to investors that they have suddenly been injected with a sense of vitality and optimism, investors remain skeptical, unable to shake off the trauma suffered in years past. When looking at the 20 day moving average of the equity put/call ratio we see that despite a record setting rally, the appetite for puts at the first sign of distress remains unusually high. In terms of overall investor psychology, not only is it the case that optimism is yet to be found, but there is a distinct sense of dread pervading price action. Markets that have investors feeling especially comfortable do not experience anomalous pessimism spikes in the put/call ratio as we observed just a few weeks ago. In the face of what has become a perpetual cycle of pessimism, the price action continues to tell a different story than the bearishness investors seem to be overly anxious to embrace. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the...
Weekly Note Preview: Targets For The SPX During Earnings Season; A Reversal In Bond Weakness Forthcoming; A Glimmer Of Hope In Small-Caps; A New Name Added To Our Earnings Trade Portfolio
In this weekend's 407th edition of Turning Points we have a 15 page note discussing new highs in the SPX along with target levels to look for during earnings season; When recent weakness in bonds is set to reverse; A glimmer of hope emerging in small-caps; Adding a new name to our Earnings Trade Portfolio. What follows is a brief preview from this weekend's note: MARKET UPDATE The SPX closed at a record high this week, validating the technical data from early December showing that the momentum move over the key red trajectory was indeed a “real move” this time, as opposed to the countless whipsaws investors have experienced over the past couple years. A perfect 3 step process has taken place from the point of approaching resistance up to where we find ourselves today. The legitimacy of this move has been proven, with one single resistance area remaining until acceleration over 5000 takes place, which I expect to occur during Q2. 4900 is a resistance area that needs to watched closely from here. In fact, this is the first area since taking up our long exposure in early December where considering taking off some risk will be appropriate. As I have mentioned previously, this isn't 2022-2023, where it will serve investors well to move to cash positions or short periodically. That ship has definitely sailed. To view the entirety of this weekend's note, you can subscribe by clicking here. Zenolytics Turning Points is 400+ editions in and only getting better. Find out why institutions and individual investors have come to depend on our service through each and every type of market environment. Click here for details. Disclaimer This website is for informational purposes only and does not constitute a complete description of our investment advisory services. No information contained on this website constitutes investment advice. This website should not be considered a solicitation, offer or recommendation for the purchase or sale of any securities or other financial products and services discussed herein. Viewers of this website will not be considered clients of T11 Capital Management LLC just by virtue of access to this website. T11 Capital Management LLC only conducts business in jurisdictions where licensed, registered, or where an applicable registration exemption or exclusion exists. Information contained herein is not intended for persons in any jurisdiction where such distribution or use would be contrary to the laws or regulations of that jurisdiction, or which would subject T11 Capital Management LLC to any unintended registration requirements. Visitors to this site should not construe any discussion or information contained herein as personalized advice from T11 Capital Management LLC....
Weekly Note Preview: What Small-Cap Weakness Means For The Market; The Rotation To Large Cap Growth Is On; Q4 Earnings Setup; The Slow Rolling Nature Of The Market; A Crypto Supercycle
In this weekend's 406th edition of Turning Points we have a 16 page note discussing what small-cap weakness means for the market; Our recent rotation from small-cap to large cap growth; How the markets are setting up for Q4 earning season; The slow rolling nature of the market that will continue to keep investors off balance; A crypto supercycle. What follows is a brief preview from this weekend's note: BTC is the embodiment of the slow rolling nature of an asset class that has had a history of vertical ascents throwing investors off given the paradigm shift in price action. We have multiple consolidations during this uptrend that take months to digest. The natural investor reaction has been and continues to be: BTC must be at a top. We have a gradual ascent that refuses to go vertical. The natural investor reaction has been and continues to be: BTC must be at a top. We have sharp pullbacks every now and then as we had in recent days. The natural investor reaction has been and continues to be: BTC must be at a top. Let's assume for a second that I am right and this slow rolling price action continues for equities and crypto. What does this mean for the bull market in 2024 and beyond? A slow bull market, especially in the face of all the macro and geopolitical anxiety investors have for 2024, will continue to be greeted as alien. The news flow will continue to grow dramatically more dire, especially as we head into elections this year. At the same time, assuming the markets continue their slow pace forward, investor psychology won't shift because it can't. Why can't it? The markets aren't following the vertical ascent playbook so there must be something wrong will be the prevailing thought. Followed very closely by “the geopolitical situation continues to deteriorate, and who knows how the US elections will turn out?” A majority of investors will remain in cash or get in cash at the first sign of trouble as a result. A majority of smart investors will see what the markets are up to, driving the markets persistently higher until after the elections when investors realize that none of the chaos they expected has come to pass. And even if some of it did, the markets didn't really care much, they just kept slow rolling their way forward. This is how early stage resumptions of secular bull markets transpire. Lack of care, followed by disbelief, followed by some interest and then eventually turning into fear of missing out. We are still in the lack of care stage, with...
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...