Bullish Evidence Builds… [Dirty Dozen]

“Consistently profitable commodity trading is not about discovering some magic way to find profitable trades… Consistently successful trading is founded on solid risk management.” ~ Peter L. Brandt, via his excellent book “Diary of a Professional Commodity Trader” (read our book notes here). 

In this week’s Dirty Dozen [CHART PACK] we share more long-term confirming bullish signals for risk-assets, we update the case to stay long and be buying here, we cover the bullish signal in BTCUSD, and end with a look at precious metals and a stupidly cheap gold miner with rare earth optionality, plus more…  

1. No new primary signals last week but our weekly Nervous & Numb indicator continues to toe the line of triggering a sell signal. Although, across the board, our long-term technical signals remain resoundingly bulilsh for the primary uptrend this year. 

2. N&N’s current reading sits at 1.54 (yellow line) and a sell signal requires a reading of 2 or above. Our Trend Fragility indicator (green line) is at 96%, which is where price action tends to become more volatile though it doesn’t mean a top is imminent. 

3. SentimenTrader published some great bull porn last week: 

“Cycling from a rolling 100-day rate of change of less than -15% to greater than +25% has occurred only at some of the most significant inflection points in the past 60+ years. None of the signals suffered anything larger than a -3.5% drawdown within the following year.”

4. And… “After shifting above 50 last fall, the S&P 500’s Relative Strength Index (RSI) has maintained a reading above that level for 98 consecutive trading sessions, the sixth-longest streak in history. Once the RSI indicator persists above 50 for 80 consecutive trading sessions, the outlook for the world’s most benchmarked index was nothing short of spectacular, maintaining an undefeated record over the following two, three, six, and twelve months.”

5. Perma bears like to overcomplicate things, while we find that those who consistently make money over the long term keep things simple. This is why we look at the same core data points each and every week. If trend is up, sentiment/positioning are supportive, breadth and liquidity favorable, and aggregate market internals are confirming (as they are now), then we’re long and buying. 

6.  BofA’s Bull & Bear indicator inched down last week to 5.8 and sits firmly in neutral territory. 

7. Our latest returns heatmap shows PM miners, financials, and metals and mining had the strongest performance last week. 

8. We believe BTCUSD is about to rip higher in another bull leg soon. BTCUSD made a new all-time high last week for the first time in over 12-months. The below chart and table mark past instances along with follow-on stats. 

9. We’re long and will be adding on a daily move above last week’s range.

10. I noted the strong Trifecta setup in CVR Partners (UAN) back in late Jan (link here) and again earlier this month (link here). The company is a fertilizer producer with a high beta to the corn and wheat markets, both of which look to be bottoming. The stock trades for 3x FCF and has a tiny float of just 7mn shares. The current setup gives us a good technical entry point to take a swing with low risk (charts below are a monthly and weekly). 

11. We’ve been big precious metal bulls since the major bear trap in gold back in the Fall of 22”. Gold is going out near its highs for the month of March, completing a major breakout from a 4-year sideways consolidation range. 

You can read more about our fundamental framework for analyzing gold here. 

12.  While we’re long the underlying futures and building on our position, we’re also quite long a number of small-cap under the radar miners (some of which trade at ridiculous FCF yields). 

One of favorite holdings in this thematic is Idaho Strategic Resources (IDR). We first wrote about IDR in June of 23’. It’s up a good deal since, and we continue to like this name. You can read some of our more recent thoughts on the name here, put together by my partner Brandon. 

Thanks for reading.

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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.