When In Greece…  [Dirty Dozen]

A trader thinking about economics is like a dog thinking about quantum physics: unlikely to be right and completely irrelevant to their lives. ~ Euan Sinclair

In this week’s Dirty Dozen [CHART PACK] we talk about a high-fidelity breadth reversal signal, rising shipping rates, constructive developments in crude, a bullish PGM play, and a small European market leading global returns, plus more…

1. Here’s a weekly chart of NQ. It shows an outside-inside pattern (oi) following 9 consecutive weekly bull bars. Odds favor a small dip and some rangebound action this week, giving us an o-i-i wedge pattern that completes with a breakout to new highs. Wait for the market to tip its hand; short on a move below last week’s lows and buy on a move above the previous week’s high.

2. Some more evidence that the primary SPX trend is bullish. The chart below shows past instances where the % of stocks above their 50dma traveled from 15% to above 90% in less than 50 days.

3. The market was up 90% of the time 6 months later with median returns of +8.6%.

4. Composite container freight benchmark (white line) and Shanghai to Rotterdam container rates (blue line) are rocking off their lows due to the increasing difficulties in maintaining global shipping lanes.

5. Sentix’s Strategic Bias for crude oil is positive and rising, showing institutional willingness to be long oil and related assets is currently a tailwind for both.

6. Meanwhile, both large and small specs are nearing crowded bearish levels. While oil’s relative valuation is at its 0th percentile, suggesting a budding bullish setup is in the works.

7. Our HUD Backtester shows that when Money Manager Sentiment is below the 10% Percentile, like it is now, the median return 252 trading days later is +16% ~ Octavio, Macro Ops Quant

8. There’s nothing to do with the trade quite yet. Crude is range-bound within a larger downward channel. Seasonality is neutral until the end of February when it turns strongly bullish. The play is to wait for the market to tip its hand and go long a breakout above its current range (green line).

9. In 1965, Stuart Oskamp did a study (link here) where he asked college students to assess a person’s personality and then make predictions about what that person would do in future events. Oskamp gave the students four rounds of information, each with increasing detail and specificity.

Here’s what’s fascinating. The students were just as accurate in predicting a person’s future decisions with one round of information as they were with four. In other words, more data didn’t lead to better accuracy. The only difference was in a student’s confidence in their predictions, which increased with each new bit of data.

There are instances where more data equals higher accuracy. Think of controlled environments where the cause and effect are more directly correlated. But when assessing something like a complex global financial system comprised of humans, more data does not necessarily = better decisions. ~ Brandon, Macro Ops Value

10. Hertz recently announced that they’re selling 20k EVs from their US fleet as they’ve found them to be significantly more costly to maintain versus ICE vehicles.

We’re seeing the start of a trend here and there are significant investment ramifications. For example, ICE cars use catalytic converters to destroy harmful byproducts that come from burning gasoline. You need metals like palladium and platinum to build catalytic converters.

Palladium and platinum (also called PGMs) have destroyed capital over the past year with prices down 45% and 13%, respectively. Sibanye-Stillwater (SBSW) is one of the largest PGM producers globally. The stock is down 57% over the past year as the company closes mines and waits for prices to recover.

That said, I think there’s an opportunity here. SBSW has a fortress balance sheet with enough cash to cover all long-term debt. The company has also demonstrated an ability to earn profits through the entire PGM price cycle. And it’s in the bottom 10th percentile in the 10YR company average valuation (chart via Koyfin). ~ Brandon, Macro Ops Value

11. You probably didn’t know this but Greece (GREK) is the best-performing international market on both a 1yr and 3yr basis, returning 37% and 55% respectively.

12. The GREK ETF completed an 8-year-long inverted H&S bottom this past year. We’re currently digging into the space and finding some incredible bargains, which we’ll be sharing with the Collective soon.

Thanks for reading.

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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.