The Energy in Energy…

Most people believe high turnover is risky, but I think just the opposite. High turnover reduces risk when it’s the result of taking a series of small losses in order to avoid larger losses. I don’t hold on to stocks with deteriorating fundamentals or price patterns. For me, this kind of turnover makes sense. It reduces risk; it doesn’t increase it. ~ Richard Driehaus

Good morning!  

In this week’s Dirty Dozen [CHART PACK] we note the Nasdaq’s critical inflection point, then talk bonds, incoming cold weather, cooking coal stocks, and other cyclical names, plus more…

  1. The Nasdaq mini closed below the midline of its weekly Bollinger Band for the first time since the COVID bear last Friday. Downside follow-through this week would confirm a major trend break.



  1. Looked at on the daily it’s at the lower range of its 2-month sideways trading range and in a neutral market regime. A move below this support would open up the Qs to  more downside.



  1. This chart from GS shows that a bear market in growth stocks has been underway for quite sometime though. 



  1. It’s hard to see the action in tech/growth settling some until we see a low in bonds (high in yields). Bonds have now seen 5 consecutive bear bars. There have only been 11 instances in history where there was a 6th, and the follow-on 2-week bias skews bullish. If we see this play out again this week then that should help put a temporary floor under the Qs.




  1. This chart from @biancoresearch shows just how rare the speed at this selloff in Notes has been.



  1. The non-transitoriness nature of inflation is behind this move. There are signs that this should moderate after the 2nd quarter as spending reverts from durables back to more services and supply bottlenecks open up, though. 



  1. Steve, our meteorologist, has a note going out to Collective members later today but the gist of it is that the next few weeks are shaping up to be dramatically colder than normal in the US Northeast.



  1. We’re already long some coal names but just flipping through some charts, there’s a lot of great technical setups out there. NRP is one of them.



  1. Cyclical/reflation names continue to show the greatest technical strength. X has started buying back shares, management keeps raising guidance, and its chart looks ripe for a breakout from its 8-month sideways regime.



  1. Dorian (LPG), an LPG shipper that we’ve written about often, is teeing up on the weekly charts.



  1. WTI is nearing $80/bbl again but Spec positioning remains incredibly bearish… Also, the energy sector shows the strongest relative EPS trends out of all the sectors.



  1. Halliburton (HAL) just closed above its 200-weekly MA for the first time since July 18’.


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.