Budding COVID Concerns…

It goes to show that when you are confused it is best to do nothing. You are just going for a random walk and that is when you are liable to get mugged because you don’t have staying power. You are likely to be faked out by some stray fluctuation because you lack the courage of your convictions.  ~ George Soros

Good morning!  

In this week’s Dirty Dozen [CHART PACK] we look at the short-term SPX technicals, building signs of bearish sentiment, Omicron numbers in the UK and SA, excessive pessimism in bonds suggesting strong forward returns, bearish oil indicators, and overbought oats setting up for a short, plus more… 

***click charts to enlarge*** 

  1. The market will likely open up to weakness this week. We may see it retest the November lows before gearing up for its next leg up. The 4,587 is the Dec monthly open price and will act as an attractor going into the end of the month.



  1. Short-term sentiment is setting up for a potential bottom soon though. @Macrocharts shared the following:

“Everyone has a foot out the door.
Options Traders are *again* among the most negative in history.
Most signals led to market bottoms or rally extensions.
The story of 2021: a historic rally fueled by doubt, shakeouts & panics.
A textbook Bull Market – get ready for 2022.”


  1. The Omicron variant and subsequent government responses are likely to drive the narrative this week. The variant has proven to be significantly more contagious. But we’ll need to wait another week or so to see if it causes hospitalizations and deaths to rise in kind or if vaccines and previous infection are enough to keep a lid on this wave…



  1. So far, the data out of South Africa is promising. The most recent wave already looks to have peaked and hospitalizations and deaths have stayed muted.



  1. SentimenTrader recently pointed out the excessive bearish sentiment in bonds, which recently hit the bottom 2% of all readings.


  1. After past reading, bonds have shown a strong bullish bias over the following months.


  1. Our Yield Indicator continues to diverge lower…


  1. The relative value case…. Wide USvEU yield spreads make UST’s more attractive to European investors on an FX hedged basis 



  1. Ultras are still in a larger sideways range buy the tape continues to show improving strength.



  1. Oats (March contract) have put in an H&S top. It’s coming off extreme overbought levels, rising over 60% above its 200-day moving average and its SQN climbing over 3.5.



  1. Small-caps are knocking on their 11-month support level. A break below would signal the start of a broader risk-off period in markets.



  1. Whether it’s the rising dollar or COVID concerns, oil looks like it’s headed lower over the short term. Brent’s 12-month time spread is leading the way down.



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.


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.