A BIG Bullish Breakout in Bitcoin Beckons [DIRTY DOZEN]

Unfortunately, as we have seen, the playing of the Game is not entirely a rational affair. If it were, the most impeccable fact-finding would soon dominate the market, and many of the players would be bored to death and would invent some other Game. ~ Adam Smith, “The Money Game”

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at skyrocketing business applications, a strange divergence in Put/Call activity, a crowded bond short, before ratio’ing a gold chart. We then cover some more bullish US housing prints, some deflationary data, a BIG compression regime in Bitcoin, and take a snapshot of snapchat, plus more…

Let’s dive in.

***click charts to enlarge***

  1. This is a pretty incredible graph. Business applications in the US are up nearly 40% this year (h/t to @keanferdy).


  1. The market is incredibly long single-stock calls relative to puts while it’s long index puts relative to calls.


  1. The following is from @MacroCharts:

Bond Speculators remain stubbornly Short one of the largest positions in history.

Extreme Bond AND Dollar positioning could be a big source of instability here – impacting all risk assets.

And critically, Stocks trade ok for now, but key Macro catalysts remain FAR from certain.


  1. For all of gold’s incredible run over the last 12-months it doesn’t hold a candle to the tear that the Nasdaq has been on. The question now is, does this relative outperformance continue? Or perhaps, even accelerate? Hat tip to @allstarcharts for the chart.



  1. We at MO continue to be very bullish on US housing plays. There’s a big demographic wave of first-time homebuyers crashing into record low mortgage rates and high housing affordability.


  1. Homeownership rises sharply once people cross 40 (chart via Barclays Research).



  1. Global industrial production relative to its historic trend has recovered to just above the GFC lows. This is a symptom of being at the tail-end of a long-term debt cycle.

We’ve spent decades artificially boosting capacity. That capacity is now meeting our declining ability to take on new debt. Hence growing excess capacity. In the coming years this capacity will fight it out with policy makers over inflation. It will take some time and a bit more shifting in policy anchoring. But have no doubt, the policy makers will win (h/t to AC).


  1. Remember all the talk two years ago about the CCP boosting their economy into 2021 for the centennial anniversary of the Chinese Communist Party? COVID obviously threw a bit of a wrench in those plans… Either way, credit markets are looking to transition to Late Expansion next year according PRC Macro (h/t WHilton).


  1. The big picture technical setup in Bitcoin today reminds me of gold in early Spring of last year. Bitcoin is trading in an extremely tight compression regime as noted by the monthly Bollinger Band width below, which is at an all-time low. Compression regimes like these lead to expansionary ones (major trends).


  1. Remember my comment above about how policymakers will eventually win the fight against deflation? Yeah, well, bitcoin is going to trade MUCH higher before this party is over. I think we see a bullish breakout soon and the Sentix Overconfidence Index shows the sentiment backdrop is constructive for a bullish move.


  1. You can find some incredible companies trading on the cheap in Japan right now. Outstanding shares in the Japan ETF (EWJ) have fallen to 7-year lows, reflecting little investor interest in the country. Yet, the market isn’t far from all-time highs…


  1. Snap Inc (SNAP) isn’t talked about much these days but it has a solid looking long-term chart. Plus, the company is doing some really interesting things around AR and could end up a clear leader in that space in the coming years.


Stay safe out there and keep your head on a swivel.

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.


Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.