A Monthly Chart Review  [Dirty Dozen]

Remember, in life, time rather than money is the most important currency, and we all have only a finite amount of time. You can win money, lose money, and earn it back again. But time is something that you can never get back, so making good decisions with the odds on your side is the best way we can give ourselves more time, or said another way—freedom. ~ Larry Hite, “The Rule” 

In this week’s Dirty Dozen [CHART PACK] we walk through the most interesting and informative monthly charts, from SPX to Gold To Vietnam and even some shippers breaking out to new highs, plus more…  

1. Monthly charts are in my humble opinion the most useful timeframe of charts to effectively see where the major trends and flows are in markets. You can do quite well just adjusting your book once a month off of these charts alone and nothing else. 

As today is the last of July I thought we’d run through some end-of-month charts, which should be useful as long as today isn’t a total sh*t show. 

SPX looks like it’ll go out near its highs for the month. This is bullish and as we don’t have any major sell signals from sentiment/positioning, internals, or liquidity yet, the odds still favor a higher move in August. 

2. We’ve been highlighting the bullish setup in crude since June and with Texas Tea about to go out near its highs for the month, this market has not disappointed. There’s still plenty of bearish positioning to fuel things and odds favor a bullish move in August. 

3. There are a few things we can say about Gold’s monthly chart. The first is that its larger bull trend remains intact. And the fact that precious metals have held up as well as they have, despite the rise in real yields, is promising. 

With that said, July is a neutral bar with a large upper wick, indicating indecision between the bulls and bears. And due to positioning, the odds favor more sideways to slightly lower chop in the near term. 

4. Despite the one-sided positioning across the curve in bonds it’s likely we see them continue lower in the very short term. We can see here that Long bonds are breaking below their recent bear flag.

I’m guessing we see a bull steepening in the curve as the recessionists finally cave as US data continues to positively surprise.  

 5. July looks like a false breakout bull trap in EURUSD (GBPUSD as well). Here’s how I read the monthly EURUSD chart. From June 21’ to Sep 22’ we saw a large bearish impulse in EURUSD (ie, many large consecutive bear bars, bulls unable to stage effective reversals, etc…). 

Following a move like this it’s typical for the market to have to put in a larger bottoming process (double bottom, complex bottom, basing period) before a sustainable trend reversal can be staged. This is why the move from Oct 22’ to now should be viewed as a counter-trend pullback within a larger downward trend. Due to this month’s price action and the consensus positioning short USD, the odds favor a resumption of this downward trend. 

6. We were BTCUSD bulls for the past month. The technicals and positioning were constructive. Miners were breaking out and running. And we thought the crypto complex would eventually play catch up to the nasdaq. So far, we’ve been mostly wrong and our position shows very little profit. 

Because of this failure to show bullish participation along with BTC’s stalling action at major resistance and a recent flip in positioning, I’m more inclined to take profits on this trade and even look for a short once risk-off signals start triggering.

7. In the last monthly roundup we highlighted GREK, which continues to run quite nicely. This month TUR has one of the better technical setups of all the country indices. After breaking out of its 5-year basing rectangle pattern and pulling back to support, the index looks like it’ll go out on the highs this month. TUR also happens to be one of the big beneficiaries of the fracturing global order. 

8. VNM, another big beneficiary of the fracturing global order, also has one of the better long-term charts. After breaking out from a year-long rectangular base it’s going out on its monthly highs. 

9. Out of the US sectors, Industrials have the best-looking long-term chart. XLI just completed a multi-year inverted H&S continuation pattern. 

10. Shippers have been juggernauting it for the past 3-years while going largely unnoticed (this is a good thing). 

One of our favorite names is DAC, which Brandon covered for our Collective a few months ago. This name is still extremely cheap and industry dynamics remain very favorable. I wouldn’t be surprised to see this name run multiples from here over the next 2 years. 

11. Here’s a more speculative tanker play, GASS. 

12. CDLX, a growth/tech name, has been absolutely destroyed over the last couple of years. It’s recently seen some positive momentum on the business front plus its stock has broken out of a 7-month rectangle base. 

And as its EV/Rev multiple has downshifted from the 15x in 21’ to the more reasonable 1x today, so it may be worth digging into some more. 

Thanks for reading.

Subscribe To Our Newsletter

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.