Gold is Starting its Next Bull Leg…

“Remember, in life, time rather than money is the most important currency, and we all have only a finite amount of time (at least until they figure out life extension). 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”

Good morning!

In this week’s Dirty Dozen [CHART PACK]  we look at Fund Manager Survey highlights, technical overextension in US markets, signs of the US dollar rolling over and a contrarian Buy Signal in precious metals, plus more…

Let’s dive in.

***click charts to enlarge***

  1. The takeaways from BofAML’s latest Global Fund Manager Survey.


  1. The SPX has risen 76% YoY from its March 20 lows, making it the 3rd largest jump in 100 years (via BofAML).


  1. The bank is predicting a rotation out of Low Quality ahead of peak stimulus coming in the second half.


  1. Strong breadth means the current Buy Climax is likely to keep playing out, for now. But… my base case is that we’re nearer to the end than the beginning of this move and US stocks are headed for a few months of sideways chop — as I outlined in this thread here.

Stimulus and easy Fed policy has cut off the downside risk though so I’m looking more for sidewaysish US underperformance, while Europe and EMs outperform as the USD resumes its cyclical bear.


  1. Bespoke Research points out that “this is the longest streak of ‘extreme’ overbought readings since January 2018.”


  1. Here’s the trade-weighted dollar (DXY) chart I’m watching. It’s retraced up to kiss its longer-term trendline and is now rolling back over. Chart is a weekly.


  1. Which is great for precious metals where the crowded positioning and sentiment that I pointed out back in early August has been fully worked off. RenMac’s Small-Traders CoT indicator just gave a contrarian Buy Signal.

We’re already long at MO and like I’ve said last week, it’s time to start loading up on miners.


  1. Here’s the breakdown of Biden’s proposed $2.3trn infrastructure package from JPM.


  1. If you believe all this stimulus is going to bring lasting inflation then JPM suggests the best assets to hide out in going forward are oil, energy equities, and EMFX.


  1. And here’s their historical performance per various inflationary levels.

  2. JMP makes the case for higher oil prices ahead, writing “Oil prices have declined about 10% from their highs on three supply developments (Texas output has normalized post-freeze, OPEC+ output increase, higher Iranian exports to China), none of which should be large enough this year to reverse the imbalance driving an ongoing decline in inventories. And since prices tend to follow inventory trends we still think that roughly $70 Brent and WTI will be reached in H2.”


  1. There’s plenty of strong looking tapes in the energy space. I particularly like international names here. One of the many charts I like is Canadian producer Arc Resources (ARX. TSX).

The stock is about to complete a 24-month inverted H&S bottom. It’s very cheap by historical standards. The company has cleaned up its balance sheet and pays out a 3% divvy yield (chart is a weekly).


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

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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.

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