Time To Short Palantir? [DIRTY DOZEN]

“What winning traders share, however, is that they all understand that losing is part of the game, and they all have learned how to lose.” ~ Jim Paul, “What I Learned Losing A Million Dollars”

Good morning!

In this week’s Dirty Dozen [CHART PACK] we look at increasing trend fragility in the SPX, track the trend in semis, discuss the prospects for “old economy” stocks, cover the relationship between fiscal and commodity returns, and more…

Let’s dive in.

***click charts to enlarge***

  1. I shared a number of *almost* yearly charts last week but waited till the official new year to share this one. 90 years of SPX.


  1. Our aggregate sentiment and positioning indicator is coming off a 90th percentile reading. This denotes significant trend fragility. Our shorter-term indicators suggest the path of least resistance is still up but the market is likely to hit a speed bump in the second half of this month. Watch the tape and keep yo eyes peeled!


  1. Semis are the group to watch, they’re breaking out of a multi-week wedge. Expect them to lead on the way up as well as the way down.


  1. I’ve been saying this for a few months but the place to be digging right now is in the “old economy”.


  1. Redistributional policies drive wealth-velocity (spending per unit of wealth) as money to the lower-income brackets tends to go straight into consumption, hence the correlation between it and the return of commodities.


  1. This greater consumption is going to meet head-on with tight supplies.


  1. Ags also have the benefit of La Nina this year which tends to lead to rising commodity prices.


  1. And the global economy will continue to benefit from the historic surge in credit.


  1. Precious metals just entered their strongest seasonal period of the year and the charts suggest a breakout may be underway.


  1. Platinum is also one to watch. It’s breaking out of a 3-year base and Specs are positioned more neutral versus the other metals.


  1. We’ve been adding some shorts to our book for the first time since Feb / March. Palantir is on our list. The company is a retail favorite, it’s trading over 46x sales, and its growth runway is not nearly as long as the market believes (I should know as I used to consult for them). Plus, we just saw a nice technical breakdown last week.


  1. Speaking of Ags, Mosaic (MOS) a potash producer, is trading near its lowest price-to-sales ratio in history. It tends to track the soft commodity cycle which just so happens to be kicking off a new bull market.


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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.