Here Is The View Of The Market From 50,000 Feet Up
Let's move up to 50,000 feet above this market in order to truly appreciate what we are witnessing presently. Here is the view from way up above: Everyone was convinced the world was ending just nine months ago. As the power of the Fed and the accompanying liquidity became known, the message went from "don't fight the Fed" to "let's make love to the Fed." As the momentum in equities, especially tech, grew increasingly powerful in nature, investors decided to completely ignore anything happening in the economy presently in order to focus on everything positive that lies ahead. As the perception of what lies ahead grew increasingly positive and powerful in nature, especially with a vaccine on the horizon, investors decided to leverage their positions. With increasing fiscal stimulus measures and a continuing lax monetary policy, the view of the Fed being all mighty and powerful has only grown. This rapid fire succession of evolving market psychology based on emergency economic measures has led to a psychosis among investors that involves complete allegiance to price appreciation without any consideration whatsoever for what can be on the other side of emergency fiscal and monetary stimulus, leading to a seemingly perfect landscape of picturesque meadows that the bulls have been given full permission to roam without boundaries. This seemingly perfect landscape is the greatest danger of all as we prepare to flip the calendar over to 2021. Investors have built up such expectations for perfection, in what has become a stunningly imperfect world, that the slightest slip of the narrative has potential to cause disproportionate reactions among the over-leveraged, over-exuberant masses. 2021 has become the year where the markets have been given no room for slipping. Everything needs to work. From the sick getting healed. To the economy reviving. To fear turning to optimism. To economic policies that have never been attempted working splendidly to the oohs and aahs of the desperate masses. It's a tall order to fill, which doesn't mean it will not be filled. However, to believe such an environment isn't fraught with danger is the peak of ignorance, or perhaps, excessive optimism that has turned into a full fledged mania. Zenolytics now offers Turning Points Market Intelligence premium service 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...
Weekly Note Preview: Market Update
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. What follows is an excerpt from this weekend's 178th Edition of Zenolytics Turning Points: MARKET UPDATE Another round of fiscal stimulus, with a likely consumer focused stimulus check component attached, is on the verge of passing. In the meantime, the important market averages are all consolidating ABOVE a key area of resistance that has now turned into support. These types of tight wound consolidations above key resistance levels that have become support are high percentage areas to take on leveraged long exposure, as we have done. There are other advantages, as well. Primarily from a risk control standpoint, knowing exactly where the market should not go, is a rarely discussed yet extremely valuable tool to possess. In this case specifically, we know exactly where the markets should not go moving forward, giving us an extremely well structured framework from which to take on leveraged long exposure. While it may not be en vogue to discuss risk in the current market environment, instead opting to simply pull your pants down and let it fly, the goal of investment is to preserve capital while taking well calculated, aggressive risk. In other words, the approach here will always take into account what our downside might be and from there we build the framework of our current approach to the market, along with the allocations necessary to take advantage. Now onto some charts to illustrate exactly where the market should not go from here.... 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...
Revenge of the Nerds
In what can only be described as an interesting turn of events on Wall Street, anything that has been obvious past July of this year has turned into a bonanza of profits for investors. The less experienced the investor, the more probability of an extreme bonanza of profits, as inexperience has continually beat anything resembling market savvy. The more obvious the opportunity, the greater the upside. It is all around us. The markets have become a Chinese buffet with all types of deliciousness for anyone who walks through the front door. You will have a population of investors and traders who will refuse to participate in such circumstances, as they realize how all of this ends. That hardened type of belief, resulting in stubbornness of action is, however, a handicap in such an environment. While these contrarian pessimists are right in their analysis of blood and gore, with the splattered brains of once virile bulls being the eventual outcome of all this, the old saying that "the markets can remain irrational longer than one can remain solvent" can come in handy here. We are in the midst of irrationality, without a doubt. However, at the same time, that very same irrationality is all around us, not just in the markets, but in governments, populations and a culture that now sees fiscal stimulus a birthright. That combination of seemingly irrational fiscal and monetary stimulus for as far as the eyes can see has potential to deliver an entirely new frame of understanding to "the markets remaining irrational longer than investors can remain solvent." Irrationality may just be the new norm. It comes with a caveat, however. Investors must still remain paranoid that this can all flip at the drop off the hat. Just as irrationality works for optimism, the thin line that separates irrational pessimism remains ever present. During December we have upped our long portfolio dramatically, to our longest overall net exposure since March/April. Unlike that time, however, our time frame isn't measured in months. These are trades that are judged day by day and week to week, at most. Zenolytics now offers Turning Points Market Intelligence premium service 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...
Weekly Note Preview: The Important Message Price Is Telling Investors After This Past Week; The Next Important Level of Resistance For The Market; An Important Ruling For Our Favorite Mortgage Related Value Name; One Chart That Summarizes Why Every Investor Should Invest In This Sector
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. What follows is an excerpt from this weekend's 175th Edition of Zenolytics Turning Points, where we discuss the following the topics in a 14 page note: The important message price is telling investors after this past week Where the next important resistance level for the market may lie An important mortgage ruling this past week that opens the door for our favorite mortgage related value name One chart that summarizes why every investor should have exposure to a specific financial sector at this stage of the recovery MARKET UPDATE In a market that has taken it upon itself to disregard anything and everything but buying the dip, while central bankers continue pushing the QE button to infinity, we are at a point in the market cycle where intellectual capacity to classify such actions must be traded in for the purity of price action alone. In other words, instead of attempting to rationalize what is occurring in the economy and the markets against any historical precedent or relevant comparison, of which there are none, investors are better off looking at what asset prices from currencies to major indices are telling us. What must not be forgotten, however, is that bulls are effectively corralled here into a pattern of behavior and concentration of investments that is vulnerable over the long-term. For the time being, while the music is playing, the dance is simply too much fun to sit out. However, the ability to adjust quickly in a defensive manner while enjoying the upside will be key to outperforming and more importantly, walking away with profits in hand. A vast majority of those participating in this orgy of capital gains will walk away with but a fraction of what they have presently. That is the simple truth of manias that get to these extreme levels. It's not an IF equation, it's rather a WHEN equation of how the market chooses to exact revenge upon those who believe above average gains will be the norm, while every single dip is a buying opportunity of epic proportions. This has been the rule of speculation since cavemen traded bones and rocks in the neolithic age. Every single time investors have come to believe that this rule of speculation has changed, they have been punished in an extreme fashion. HOWEVER, in the meantime, the music is playing. So let's dance. At the same time, understand that defense in the form of hedging and taking lots of profits along the way...
Welcome To The Twilight Zone Of Investing
We are in the Twilight Zone of investing as we run into the final weeks of 2020. Being in such a peculiar spot has created a bifurcation of sorts, in that professional investors recognize how this story ends, with blood, gore and mayhem being the inevitable outcome. However, all the meanwhile, we are in the midst of a retail power play that has amateur option traders trouncing anything your Wall Street professional can conjure up. Even the tame side of the retail investment spectrum, who just decide to trade stocks, are making seasoned professionals on Wall Street look like newbies with investments in TSLA, NET, SPCE, SNOW and countless others. What it becomes is a question of approach as we move into 2021. There is a certain inevitability that a majority of us know is coming. However, in the meantime, performance in such a vibrant bullish environment demands investor participation. Balancing the inevitability of what is to come (bearish), with the performance demands of keeping up with the major market averages (bullish), will be the key to outperforming in the weeks ahead, as well as throughout 2021. What this means for investors is agile footing, as long positions should give way periodically to a market neutral stance when risk/reward dictates. A vast majority of those investors who have been perpetually bullish throughout Q3 and Q4, with little doubt in their thesis, will be the ones who suffer the largest drawdowns once the inevitable future of maniacal speculation becomes the inevitable present of a market that succumbs under its own weight. In order to avoid being in the vast majority, the attention of investors must be focused on risk, with a strategy towards hedging risk and possibly getting net short incrementally when price dictates that course of action. A singular minded focus on bullish excess, while being rewarding currently, must be tempered with a realization of the risks involved in a derivative driven market that has created a frenzy among investors. While we are net long presently, realizing that investors are being treated to a course on anomalous market behavior of the bullish kind, our focus remains on preservation of the capital gains created this year through a fine balance of opportunistic bullishness and tactical bearish operations, when the market dictates. Be like water, my friend. Zenolytics now offers Turning Points Market Intelligence premium service 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...
Weekly Note Preview: Five Macro Themes Set To Emerge; The Role Cryptos Are Set To Play; A Look At Key Macro Indicators; Exponential Upside In A Small-Cap Financial Name; A Leveraged Means of Investing in Bitcoin
What follows are the topics covered in this weekend's note to subscribers. To become a client of Zenolytics Turning Points or to learn more click here. In this weekend's 172nd Edition of Zenolytics Turning Points, we discuss the following the topics: Five themes set to emerge in the economy and markets over the next 6-12 months What role cryptocurrencies are set to play as both an investment and an indicator of liquidity moving forward A look at what key macro indicators are telling us after this week's breakout across market averages Why there remains exponential upside in a small-cap financial name we are holding that was up 50% this week A study of a leveraged means of investing in Bitcoin 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...
Here’s The Thing About Mania Levels of Bullish Sentiment
Sentiment by itself is terrible as a reliable tool to judge reversals in the market. When combined with any number of other factors, the most important being technical patterns across important market averages and assets, you can typically come within striking distance of catching tops and bottoms. However, there are times when even the best patterns combined with all kinds of compelling contrarian evidence of a reversal punch you right in your dome, reminding all of us that markets can neither be caged or compelled to act in a way that is consistently predictable. What works one day will fail another. What works for a decade straight will rip your heart out in the next decade. Over the past couple of months our short positions in the market were obviously premature in nature. These positions were taken as a result of a combination of factors, including both technical and sentiment based. As we kick off the final month of the cage match that has been 2020, long positions across sectors have, once again, become the order of the day. With the markets at new highs, punching through all kinds of important resistance levels over the past week, the primary reason to remain bearish will be sentiment based. That's a real problem for bears. What most fail to realize is that mania levels of sentiment, whether bullish or bearish, have a tendency to act as a self-reinforcing mechanism in the direction of the mania. The trigger for what ends up becoming a parabolic run is a combination of mania levels of sentiment AND a market that breaks through all relevant resistance levels. While there are some minor resistance levels remaining in the market, the moves of the past week over resistance now create a scenario where all upside possibilities must be entertained. We're long small-cap finance, large-cap tech, with a smattering of names in between. Zenolytics now offers Turning Points Market Intelligence premium service 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...