Hi Ho Silver… [DIRTY DOZEN]

“There is timing in the whole life of the warrior, in his thriving and declining, in his harmony and discord. Similarly, there is timing in the Way of the merchant, in the rise and fall of capital. All things entail rising and falling timing. You must be able to discern this. In strategy, there are various timing considerations. From the outset you must know the applicable timing and the inapplicable timing, and from among the large and small things and the fast and slow timings find the relevant timing, first seeing the distance timing and the background timing. This is the main thing in strategy. It is especially important to know the background timing, otherwise your strategy will become uncertain.” ~ Miyamoto Musashi

In this week’s Dirty Dozen [CHART PACK]  we look at more conflicting data, bear market analogs, recession indicators, Fed narrative pendulum and inflation expectations, dislocations in the mortgage market, and a budding setup in precious metals, plus more… 

  1. @QuantifiablEdgs on the “reverse” Zweig Breadth Thrust last week: “There have only been 10 instances dating back to 1928, and the current instance is the 1st one since 1943… On average the market was down 2.5% five days later, down 4.3% ten days later, down 7.1% one month later, down 7.3% three months later, and down 7.7% six months later. I will not put a whole lot of faith in a signal that has not triggered in nearly 80 years. But the fact that we have seen such an extreme breadth collapse the last few days does seem notable.


  1. Just in case you’re not bearish, here’s something from @michaelbatnick to confirm your bullish bias: 

“The S&P 500 fell > 1% for each of the last three days. The last time it hit four in a row was December 2018. 

“The other times this happened, with the exception of 2008, was at or near bottoms. Past performance etc etc.”


  1. Here are the “ten most recent highly-correlated bear markets” via SentimenTrader. 


  1. Stifel published an excellent chart pack the other week (link here, h/t @tom_morganKCP)


  1. @ukarlewitz shared this chart and study into the U of M consumer sentiment and SPX forward returns. 



  1. CME’s FedWatch Tool shows the market is giving roughly 28% odds of a 75bps hike this week. 


  1. Median forecasted inflation and UofM inflation expectations jumping to new highs mean we’re still not at peak Fed hawkishness within the swing of the Narrative Pendulum. 


  1. Here’s a great breakdown of which components are driving the CPI numbers via Prometheus Research’s substack, which I recommend signing up for. 


  1. I highly suggest you read this from the mortgage market veteran, Louis Barnes (link here)… “During the last forty-four years, my days have begun and ended with the mortgage market. Four painful moments stand out. Today makes five.”


  1. It’s still too early to call it but we could have a major bear trap in silver on the monthly chart. I need to see more from the bulls but the tapes in precious metals continue to shape up and the macro is getting close to turning from a headwind to tailwind. 


  1. Positioning and sentiment in both gold and silver have been completely washed out and are supportive of a durable base. Silver is also coming off of deeply oversold levels (see MA spread charts in bottom right) so reversion is working in its favor.


  1. Endeavor Silver Corp (EXK) is a miner we’ve owned and traded in the past. Below is their monthly chart showing the stock reversed off a significant level last month. Not a bad point to begin building a starter position and wait for bullish confirmation before adding size. 

Thanks for reading.

Stay frosty 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.