A Monday Dozen [CHART PACK]

When traders think about money management, they think about stops and trade management. But a big part of the equation is knowing when to go all in, increase the leverage and press your trading to the hilt. Load the boat. These opportunities have an increase in volume and volatility. There is no point in actively trading in a dull market. Let the market tip its hand and come to life first. And then if you are fortunate to be in the groove and know you’ve got a tiger by the tail, milk it for all it is worth. This is where the real money is made. ~ Linda Raschke

Good morning!

We’ve got bonds that are massively overbought, spiking volatility in gold, a bearish consensus, and signs of increasing market strength. Here’s your Monday Dozen Chart Pack.

1. The UST 10-year yield moved below the 2% level last week (dotted red line) before quickly reversing. It’s at its lower daily, weekly, and monthly Bollinger Band and its weekly RSI shows it’s extremely oversold (green vertical bars). Do we see a reversal soon?

2. Gold volatility spiked over the last two weeks as the barbarous relic made a move above the all-important $1,400 level. Large jumps in volatility like this often mark short-term reversal points. Chart via SentimentTrader.

3. According to the BofA Fund Manager Survey, fund managers reduced their equity exposure last month by the second largest amount ever (largest occurred in August 11’). They now have their lowest allocation to stocks since March of 09’ which is 2.1std below their long-term average.

4. They LOVE defensives (cash, bonds, utes) and HATE energy, eurozone, and industrial stocks.

5. Citi’s Pulse Monitor Bear Market Checklist shows that the risk of a recession and an extended bear market remain exceedingly low. An “imminent bear market” signal is triggered when amber and red combined readings rise over 50% — current readings are 25% with only one “danger” warning.

6. Foreign demand for USD denominated securities has been weak but US corporate repatriation flows rose last year, following the tax cuts, which helped keep the US dollar elevated. These repatriation flows are now starting to turn over (chart via MS).

7. EURUSD 2-year swap rates and EURUSD have diverged, with swaps moving much higher. Swaps often lead the way…

8. FX volatility has not followed bond volatility yet… I think that’s about to change.

9. The strong dollar has dented US corporate profits over the last 18-months. A reversal in the DXY here would be a major tailwind to US MNCs.

10. Market breadth is STRONG. Another Zweig Breadth Thrust Buy Signal recently triggered. Total Put/Call 10dma indicator still has room to fall before a sell-signal is tripped.

11. The charts for silver miners look 🔥 + specs are getting pinched on crowded short positioning (chart below is a weekly of CDE).

12. The Three Pillars of US Macro (Labor, Liquidity, and Consumption) are still alive and well. An impending recession is unlikely.

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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.