Time To Get Long The Loonie

There was a long period during which nearly every thinking man was in some sense a rebel. Literature was largely the literature of revolt or of disintegration. Gibbon, Voltaire, Rousseau, Shelley, Byron, Dickens, Stendhal, Samuel Butler, Ibsen, Zola, Flaubert, Shaw, Joyce – in one way or another they are all of them destroyers, wreckers, saboteurs. For two hundred years we had sawed and sawed and sawed at the branch we were sitting on. And in the end, much more suddenly than anyone had forseen, our efforts were rewarded, and down we came. But unfortunately, there had been a little mistake. The thing at the bottom had not been a bed of roses after all, it was a cesspool full of barbed wire. ~ George Orwell (h/t @BrentBeshore)

Good morning! 

In this week’s Dirty Dozen [CHART PACK] we look at the neutral range for the SPX along with mixed signaling for both the bulls and bears. We then discuss inflation, value factor, peak supply chain hysterics, and a new bull leg in the loonie, plus more…

***click charts to enlarge*** 

  1. I’m seeing mixed signals and expecting neutral-ranging action until either of these levels are broken. Hedge, play both sides and wait for the tape to tips its hand.


  1. One for the bulls, we now have positive seasonal tailwinds after passing the dip in seasonal weakness on the 9th.


  1. On the other hand, we have elevated valuations with a Fed that looks to be abandoning FAIT as inflation proves less transient than first hoped.


  1. If inflation stays elevated then we should expect to see valuations continue to contract (chart via Crestmont Research, h/t @BodhiTreeCIO).


  1. But as @MacroLukas recently pointed out, we’re probably near peak supply chain hysterics. And normalization on that front will help slow the rise in CPI…


  1. In the meantime, the value factor should continue to outperform.


  1. I’m watching cyclical vs defensives here. New relative highs would be a bullish tell for the broader market.


  1. FANG stocks are trading at their lowest premium to the broader market since the 2018 bear market low (chart via BBG). GOOGL, MSFT, and AAPL have seen nice pullback and reversals at their weekly Bollinger Band midlines.


  1. The crypto charts look solid and are acting as a lead for the broader market. BTC open interest is finally perking up after trending down for the last year. This is indicative of big money interest returning to BTC, which bodes well for the sustainability of this bull move.


  1. Semi breadth keeps deteriorating which typically leads to broader risk-off in the market. Let’s see if SOX can hold its 200dma. As I said, lots of mixed signals out there.


  1. The loony is embarking on another leg up, with some help from higher oil prices. Rate spreads, spread momentum, and positioning are bullish tailwinds for CAD.


  1. USDCAD (inverse shown below) is technically constructive on both longer and lower timeframes. CADJPY is another one to watch for an entry on a pullback.



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.

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