A Giant Wall of Money

Love this Bacon quote 👆

Good morning!  

In this week’s Dirty Dozen [CHART PACK] we again lay out the bull case for risk assets over the near term. We look at positive breadth thrusts, a GIANT wall of inflows, fund managers raising cash, calendar effects, a bearish setup in a popular growth stock, silver at support, and an international container shipper selling for beans, plus more… 

  1. The SPX hit our 4,800 MM target before year’s end, as expected. I’m now looking for a brief pullback before another run-up. The next target is the big round 5k level. Once we get there we’ll probably see profit takers come in which should slip the SPX into a trading range/pullback for a few months. But who really knows, just gotta play the tape!

 

 

  1. The McClellan Oscillator jumped to its highest level since the Nov 20’ bull thrust that marked the end of a volatile multi-month sideways range. This is bullish… 

 

 

  1. The wall of money that has flowed into major US Indices over the last couple of months is sure something… Typically you see this type of mass inflows at major bottoms or in the lead up to larger tops

 

  1. These inflows have almost entirely come from the retail crowd over the last 2-years.

 

 

  1. BofA’s December FMS contained a few interesting data points, such as (1) cash holdings surged to 5.1% triggering a contrarian “Buy Signal” (2) yet, just 13% of respondents are UW stocks and (3) only 9% expect bond yields to move lower.

 

 

  1. Here are the standout charts from the report. 

 

 

  1. LPL Research put out a good “Charts of the Year” post which you can find here. They point out that 2021 was one of the best years for stocks on record with a 27% market return and only one 5% pullback all year.

 

 

  1. We should certainly see more volatility this year as we’re past peak liquidity and moving into a global tightening regime. Plus, there are some negative seasonality headwinds coming up. This chart was shared in Jesse Stine’s latest market note, which you can find here.

 

 

  1. Silver held its line on the monthly and miners rebounded off their lower monthly BBs. PMs could be setting up for a year after a sideways 2021.

 

 

  1. A former employer of mine, Palantir Technologies, closed near its monthly lows after breaking down from its year-long sideways range. The measured move target is $10 which would make for a full round trip to its IPO price.

 

 

  1. Homebuilder Beazer Homes may be making an attempt to break out from its decade+ long basing pattern. It’s seen a number of consecutive strong positive beats, it’s trading for only 4.8x EV/EBITDA, and is growing both the top and bottom line.

 

 

  1. Here’s a company I’m digging into this week. ZIM Integrated Shipping Services (ZIM).  ZIM is a container shipping company based out of Haifa, Israel. I don’t know anything about the name but on the surface, it looks very cheap, it’s seeing strong growth, and its chart is in a clear uptrend.

I’ll be out with a report later this week if there’s anything here. 

 

Thanks for reading.

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.

AK

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.