Bulls Fighting To Save March

***The following is an excerpt from a report sent out to Collective members Tuesday morning***

We have 5 trading days left in the month of March. As I pointed out in the Brief over the weekend, the bulls are trying to close the month above the 2018 lows (roughly 2,350 on the SPX) and reclaim the bull market trendline (2,350) if possible. If they succeed it would lead to a sizable tail on the monthly candle and raise the odds that we see a couple of weeks-to-months of sideways to up action in the US indices. 

click on charts to enlarge


A 60 min chart shows the SPX  has been in a month-long sell climax forming a sharp descending triangle. These setups often lead to sharp and powerful retracements higher.



Extremes have been reached across the board in technical, sentiment, and positioning data.

BofA’s Bull & Bear Indicator recently triggered a strong buy signal.

Their Flow data show a number of extremes were hit last week, indicating a potential short-term selling exhaustion event. 

Indicators of market breadth are hooking up from near-record oversold levels. Our Zweig Breadth Thrust Indicator (bottom right) is triggering its first buy signal in over 45+ days.


Credit markets are confirming the bullish action with Markit’s CDX IG index on track for its first multi-day rally in 5+ weeks (chart via Bloomberg).



There are two potential catalysts to drive an extended bear market rally here (1) is the likelihood the US senate soon passes a major fiscal stimulus bill and (2) Italy is finally seeing a consecutive decline in new daily cases.


A few quick thoughts before I get into how to play this.

  • Odds strongly suggests that we’re in the early innings of a cyclical bear market which will be accompanied by a recession starting within the next quarter. 
  • Bear markets last an average of 18-months and a second major low (double bottom/complex double bottom) is usually put in 12-months after the first major low.
  • The most explosive short-term bull rallies occur in bear markets, as crowded shorts are forced to cover as eager bulls buy thinking the bottom is in. 
  • Newton’s First Law reigns supreme as momentum begets momentum and sideways chop begets sideways chop. This is fractal and true across all timeframes.
  • Bear markets tend to spend more time trading sideways to up than they do going down as the selloffs occur much faster than the up/ranging action.

These are all just odds and probabilities. Today’s buy setup could very well fail, as they have tended to do over the last two weeks. 

This market has EXTREME tape bomb and overnight gap risk. Due to the uniqueness of the exogenous shock (virus and government-mandated shutdowns), there are no good historical parallels. Everybody is flying blind. Due to the above, along with the rise in daily volatility, it’s important to size positions small and maintain plenty of dry powder. 

Watch the close today. If we’re able to close near the highs, that’ll raise the odds we see further follow-through. We’ll probably need to see at least a few consecutive up days for the bulls to aggressively step back in and drive the rally significantly higher. 

Conversely, if the market sells off towards the end of the day — which is exactly what it’s done the last few “Turnaround Tuesdays”. Then we go right back into wait and watch mode. 

Here are the trades we’re looking to make if the market holds strong into the close…

***Click here to check out our Collective and see what we’re buying and selling right now***

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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.