I interrupt the regularly scheduled posts to inform everyone that I just found a box of mint-condition Topps baseball cards in my basement.

I might be retiring.

Then, again...

Stay tuned.

Thanks for reading my Diary today.

Enjoy the evening.

Be safe.

Late last week I had promised to deliver a lengthy missive on my current market outlook today. 

That will be coming in my opener tomorrow.

Long (small) VanEck Oil Services ETF (OIH) . 

Low conviction.

At 2:45 pm:

Poor Breadth - that understates the market weakness 

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Biggest Movers

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Heat Map

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Here is a good example of a respectful thread about an interesting subject and debate: 

badgolfer22

bitcoin pointing the way for the QQQ's

dougie kass badgolfer22

disagree.
that's become a "catch phrase."
different asset classes
dougie

Tattoo522 dougie kass

Since the market started declining last Dec, Bitcoin and tech stocks have been the SAME asset class -- "Speculative."

The lower area on this chart is the Correlation Coefficient for Bitcoin vs the NQ futures. The green area starts on Dec 1st and shows the drastic change in correlation vs the prior area (+1 is 100% correlation, -1 is 100% non-correlation). These two are spending a YUGE chunk of time at the 90%+ correlation level. I'd call that pretty darn correlated.

dougie kass Tattoo522

to me this is data mining
i would want to see the multi year correlation (r squared) between the two asset classes.
could you do that?

look at the pre dec 2021 period in tatto chart, no correlation.
dougie 

BillyBob dougie kass

As you well know, 8 months is a lifetime for a trader. One can go broke many times over fighting that "bogus" correlation.

Tattoo522 dougie kass

I don't have that kind of tech! Here's the correlation going back to the start of 2017 (when Bitcoin really started to burst onto the retail scene). You can see the marked difference in its correlation in all of the years prior vs starting last Dec. It does seem like it was trending towards higher correlation prior to last Dec, but that's when the light switch was flipped, for sure.

The correlation prior to 2017 is pretty random. There are no long trends of positive or negative correlation. Prior to 2017 doesn't have a lot of validity to my mind anyway, as you had to be a complete crypto fan to have purchased it at that point.

dougie kass Tattoo522

thanks for doing this T!
dougie

Rolf Thrane dougie kass

Lol 

Rolf Thrane Tattoo522

- I didn't see this before my post

badgolfer22 dougie kass

we shall see...bitcoin and ether still a risk on measure.

Rolf Thrane badgolfer22

I bet the R square is over 90% this year on a regression with daily intervals

dougie kass badgolfer22

challenge the correlation!
dougie

jesusishere dougie kass

It seems to be positive.

dougie kass jesusishere

data mining by only looking at last eight months
the prior eight months shows no correlation
dougie

Tattoo522 dougie kass

Yes, exactly! Now that the Fed is on the hiking/tightening warpath and removing liquidity, all speculative assets are trading downwards vs having their separate moments in the sun. The stock market and the correlation changed in Dec.

BillyBob dougie kass

As you know, 8 months is a lifetime for a trader. One can go broke many times over fighting that "bogus" correlation.

Speaking of streaming, (ROKU) is the short gift that keeps on giving.

I recently added in a small way to (DIS) at higher prices: 

Aug 23, 2022 ' 01:02 PM EDT DOUG KASS

Disney Add

I just added to (DIS) at $115 - it's about -$12 from its recent high.

Position: Long DIS, Short DIS calls

Even though Dan Loeb's Third Point hedge fund is in the background as a potential catalyst, given my continued fears of streaming's "profitless prosperity" and the schemissing of the shares of "value plays" (WBD) and (PARA) , I would hold back until the shares traded back to $100-$105. 

Here is my bearish streaming thesis from March: 

Mar 28, 2022 ' 11:40 AM EDT DOUG KASS

Streaming May Be Destined Towards a 'Profitless Prosperity'

Shares of the streaming companies are broadly lower today (Discovery and Paramount are each down by about 3%-7%) as, over the weekend, Barron's Magazine's cover story on The Streaming Wars came to the same conclusion I did in late February:

Feb 22, 2022 ' 09:35 AM EST DOUG KASS

Streaming and Online Gambling May Be Destined Towards 'Profitless Prosperity'

* Three of the most dangerous words in an investors' lexicon are... "total addressable market"

* A dead cat bounce is possible but challenges towards the road of profitability for streaming and on line gambling suggest the stocks are unattractive from a longer term standpoint

* Maintaining a short in ROKU - a company whose competitive moat is getting flooded

"When the facts change, I change my mind. What do you do, sir?"

- Paul Samuelson

Companies like ViacomCBS (VIAC) , Discovery (DISCA) and Disney (DIS) in the streaming business face formidable obstacles to a path of profitable growth over the next few years.

And companies like DraftKings (DKNG) and Penn Gaming (PENN) in the on line gaming business face similar challenges to profitable growth.

What do streaming and on line gambling have in common?

* High valuations base on the assumption of rapid growth, large addressable markets and the evolution/revolution away from legacy players - television (ABC, CBS, NBC)/movie theatres and brick and mortar gaming properties like Wynn (WYNN) , Las Vegas Sands (LVS) .

* Escalating acquisition costs per customer - rising, outsized and arguably reckless spend on content costs, huge advertising and promotional outlays coupled with ballooning marketing expenses as the players invest in the future.

* Large operating losses, negative cash flows and no free cash flow for years.

* A competitive market place in which numerous competitors are all fighting for market share - with a number of recognizable brands and well financed participants.

* Optimistic out year forecasts reflecting the perception that the companies serve sizeable total addressable markets.

* Seen by investors as growth businesses - streaming and on line gaming IS THE FUTURE.

* High current valuations (against "adjusted" EBITDA forecasts) and both are extremely popular to investors and analysts - capitalized at large numbers.

* Weekly average users (streaming and online gambling) have likely peaked.

* Streaming and on line gambling demand may have been pushed forward - and growth could be less than expected going forward - as the economy opens up as there are a fixed number of hours in the day!

Bottom Line

While the stock prices for industry participants - streaming/online gambling - have been decimated - the likelihood of a path of "profitless prosperity" for years to come is now my baseline expectation.

This assessment is in marked contrast to the optimism of the sell-side on Wall Street and to many money managers who profess optimism.

A dead cat bounce is possible at any time and maybe even likely, but, for now, I would not yet accumulate either streaming or online gambling as long term investment holdings for the reasons above.

My only exposure in streaming and online gambling is my (ROKU) short.

It is my continued view that ROKU, which aggregates and creates a gateway to streaming platforms, will go the way of the Tyrannosaurus Rex - becoming an extinct species subject to a shifting competitive landscape that could result in ROKU, ultimately, not being in the mix as Smart TV competitors - Amazon (AMZN) , Alphabet (GOOGL) , Visio, Samsung, etc. - invade ROKU's market by delivering their own operating systems.

I remain an outspoken Bitcoin bear, see here.

Aggressively buying banks into the whoosh lower.

The big headwind today is the sharp climb in bond yields - the yield on the 2 and 10 year Treasury notes are +11 and +15 basis points, respectively.

Without this obstacle, I suspect we would have gotten all of the S&P's Friday losses back today. 

Even with this headwind, stocks are barely lower... for now.

Picking back in some Green Brick Partners (GRBK) .

I had some sold in early August: 

Aug 08, 2022 ' 10:12 AM EDT DOUG KASS

Green Brick

I have reduced my Green Brick Partners (GRBK) long today.

I just added to (SPY) at $389.41.

This morning's somewhat volatile action has been primarily about technical trip wires. As we said in the preopening Comments, the bulls came into the day with control of the ball and at the opening bell, stocks moved ahead as had been indicated by the pre-opening futures.

Unfortunately, the yield on the ten-year, which had been pushing against recent resistance at 3.26/3.28%. It looked like it was pushing through and that sent a chill through many of the equity buyers. The Dow then reversed from up over a 100 to down 200.

Most importantly the S&P tested and tested and, for a brief moment, slipped through the 3900 level. When they pushed below 3900, however, it did not result in any trapdoor selling and that seemed to bring the bargain hunters back into the game and that spread through the rest of the equity market. We have basically erased most of the early losses and seem to be headed back toward neutrality.

I wonder if that may, in fact, be part of the syndrome over the last couple of weeks, in which markets tend to rally as we head toward the 11:30 a.m. EDT close of European markets. It will be interesting to see if they change their disposition. After that, I would certainly continue to keep my eye on the ten-year, which has modified a little and I think that will influence at least the speculative side of the equity traders.

The key will be how they respond after we get past the European close. Will they change disposition one more time around 1:00 or 2:00 p.m.?

In the meantime, let's go over some of this morning's numbers.

The yield on the ten-year under 3.35% is probably neutral. The yield under 3.31% might be a little bullish and, of course, higher than 3.36% should bring pressure to stocks. It is important they try to close above 3900 in the S&P on any pull back. This morning's intraday low at 3885 will be important and breaking that will bring in follow-up selling.

So, the bulls almost fumbled the ball away this morning, but it is all about these technical trip wires.

Stay tuned and stay safe.

Arthur

BillyBob

This is a re-post about the markets from an equity manager/trader friend of Fleck. Was posted below earlier, but mysteriously disappeared.
Well worth considering.
FWIW, I agree with everything he says, and carrying over 80% cash. Caveat Emptor.

Q: Let's see,...China is seeing a major drought - caused drop in electricity generation (shrinking hydro power) with subsequent shuttering of assorted mfg facilities. At the same time, their "zero Covid policy" is shutting down another major city, and their extreme housing bubble has cracked with all the nasty ramifications of that sort of "thing".
Meanwhile, there are a few bank runs popping up along the way. The entire "China Miracle" has essentially been a massively over leveraged construction bubble with millions of unsold residential units with accompanying defaults among the "presumed" buyers of zombie properties. In effect, China is facing a major crash resulting from their addiction to debt leverage having reached a saturation point.

Meanwhile, the idiots running the European Union have reached the limits of their "Green" religion and now are facing the consequences of trashing fossil fuels. Electricity bills jumping 50-150%, virtually overnight; Germans cutting down forests, stockpiling firewood for the winter season; Poles lining up in multi mile convoys trying to stock up on coal for their fireplaces this winter; natural gas doubling, then tripling; ECB about to stick a pin in THEIR insane "everything" bubble ( ...negative interest rates?...you gotta be kidding...).

I wonder what might happen in that circus once real interest rates become an emerging "fantasy" among so-called "investors". And then, there is our own backyard with a possible Fed hell bent on jacking rates higher than "expected", telegraphing that possibility, and then adding more weight by planning to stay "there" (wherever "there" might be) for a lot longer than "expectations". All this "stuff" seems like a perfect brew for some sort of crash-like panic over the next six months.

All the warning signs, suggesting a real washout, have been staring us in the face for over a year. Virtually no one has been able to comprehend the downside possibilities but that might be changing. If the vast herd of "novice" investors (anyone entering the investment game over the past 25 years) begins to analyze their only "bear markets" (2008-9 and maybe even the little "tech" bubble of 2000-2002), and then, perhaps multiply those experiences by a factor of two (in both time and magnitude), they might get close to the eventual outcome.

* Covering (RH) short.

* Covering (WHR) short.

* Covering (GS) and (MS) shorts.

I guess it could have been worse with the response in European natural gas to the Nordstream1 shutdown. Dutch TTF is up 4% over the past 2 days, giving back most of yesterday's jump. After falling by almost 50% last week, after doubling in the two weeks prior, German power prices are up 7% over the past two days. The senior VP for gas and power at Equinor, the large Norwegian energy company, said today in an interview in Milan that at least $1.5 Trillion of money will be needed to backstop margin calls for trading positions in oil and gas.

And we're not talking about some speculator, we're talking about utilities and the like that buy gas that have a potential problem. The exec said "This is just capital that is dead and tied up in margin calls. If the companies need to put up that much money, that means liquidity in the market dries up and this is not good for this part of the gas markets." Government backstops are going to be needed he said.

The price cap thing that is being debated, while with good intentions, makes little sense to me because it would only sustain demand and further crimp supply which is what is needed to cure such high prices. How many times over history are we going to experiment with price controls expecting a different result?

The pound is rising about .50% after a slight gain yesterday as Liz Truss takes over 10 Downing Street. I do believe there is reason for optimism with her tenure.

On the flip side is a further breakdown in the yen which busted thru the 140 level late last week and continuing lower the past two days and seems to be headed for 150 which would be a level last seen in 1990. The BoJ will be tested again with YCC as the 10 yr yield closed at .242%. Their 10 yr inflation breakeven is higher by 1.6 bps to .924%. With the ECB possibly hiking by 75 bps on Friday after the Reserve Bank of Australia hiked 50 bps overnight, the BoJ is more and more out of place with policy. The Japanese Finance Minister, as seems customary when the yen falls further, said the large yen moves were "undesirable" but those words are empty.

It's a good thing that the Japanese government decided to reopen 9 nuclear facilities by yr end because the energy cost squeeze is intensifying. We remain bullish and long of uranium.

Yen

With respect to the RBA, the 50 bps increase was as expected to 2.35%, the highest cash rate since 2015. Governor Lowe in a statement said "Price stability is a prerequisite for a strong economy and a sustained period of full employment. The board expects to increase interest rates further over the months ahead, but it is not on a pre-set path." That last sentence has the Aussie$ a touch lower as maybe it implies that more 50 bps rate increases are not guaranteed from here and slowing down 25 bps is possible. RBA expects inflation in Australia to peak near 8%. The 2 and 10 yr Aussie yields are little changed for a 2nd day.

German factory orders in July fell for the 6th straight month and down by almost 14% y/o/y. The Economy Ministry said "The development of demand in the manufacturing sector continued to be weak at the beginning of the third quarter in view of the war and high gas prices." Any of us could have written those words.

It seems every day there is another European factory that is cutting output or outright shutting down in response to the spike in gas prices. Today I saw Aluminum Dunkerque in France, which is their largest aluminum smelter, trimming production by 20%. Norsk Hydro is reducing production by "a few tens of thousands of tonnes" said a spokesperson.

On Friday, I saw ArcelorMittal shut a pig iron blast furnace at a facility in Germany and Aldel, a Dutch aluminum producer, was closing some of its capacity. Notwithstanding this, aluminum prices are little changed at the lowest since April 2021 because of demand worries but we're seeing major supply crimps across a variety of commodities.

Aluminum price as of yesterday's close on LME

* Initiated a buy in (XLF) .

* Added to (SPY) , (MSOS) , (BAC) , (C) , (WFC) , (PNC) and (JPM) on the whoosh lower.

For the reasons mentioned in my previous post, the Financial Select Sector SPDR Fund (XLF) is my Trade of The Week. 

I have initiated an XLF position at about $32.54.

* There is a growing probability that the banking industry may face an almost picture perfect economic and interest rate backdrop

* I am no Pangloss, but the outlook for traditional banking remains quite strong

* At the core of my optimism regarding financial stocks are my expectation for a mild and brief recession, contained credit issues, a solid labor market, a relatively healthy consumer - armed with large unrealized gains in equities and in the housing stock - a still healthy housing market, a view towards higher interest rates (for longer), a strong and under levered U.S. banking industry/system with healthy structural economic underpinnings and, as a starting point, low relative (0.5-0.6x) and absolute valuations (8-9x)

* For me, it's the time to be an opportunistic buyer during the potential bottoming in the non traditional - capital markets, trading, investment banking - financial industry fundamentals that I expect

* Remember, in banking , the value is the customer base - the industries' deposit/asset bases are "sticky" and higher rates for longer means the value of those deposits are appreciating

In terms of Street Cred, as mentioned previously, I have been following financial stocks since I was a "yute." 

1. While earning my MBA at Wharton I was a "Nader Raider." In that capacity I cowrote (three chapters) of the book Citibank with Ralph Nader and his Center For the Study of Responsive Law.
2. My investment career started as a housing analyst at Kidder Peabody - where I produced research on mortgage related equities.
3. At Putnam Management in Boston I was voted by a leading investment magazine as the top ranked buy-side analyst of banks and thrifts.
4. I am currently a Special Advisor to the Board of Directors of Ocwen Financial (OCN) - a leading mortgage originator and servicer.

So, while, at times my head spins regarding cloud, artificial intelligence and other specialized/niche technology stocks - I have a reasonably strong knowledge of many facets of the financial industry.

Turning Much More Optimistic

A month ago I turned more cautious on the market and on bank stocks - since then most large money center banks have declined by about -10% as fears of a deeper recession have returned:

Aug 11, 2022 ' 02:05 PM EDT DOUG KASS

Backing and Filling?

Banks have been the world's fair.

But in keeping with my more cautious market view, I have been selling calls against my positions in (WFC) , (BAC) and (C) .

May be time for the group to rest.

I still see a strong upside for those with 1-3 year horizon.

Given the following set of circumstances it is time to become much optimistic on bank equities - particularly when viewed in an intermediate or longer timeframe:

1. Of note, comments by Federal Reserve Chairman Powell and other Fed members suggest that they have finally come to the realization that inflation will be slow to moderate and, that, resultingly, interest rates will likely remain higher for a longer period of time. As the banking industry is asset/rate sensitive, monetary policy will be an ally to bank profitability, valuations and stock prices.

2. Not reflected in the historically low valuations, the large money center banks have high and improving quality, predictable and more sustainable profit streams which are now benefiting from a rising trend in net interest income and an elevated and a relatively sticky retail deposit base: 

When rates are climbing and will remain relatively high, as I expect over the next few years - I view the explosion in those "sticky" deposits as a strengthening asset, similar to a rising deferred revenue line - setting the stage for more predictable and higher profits in the years ahead.

3. As to the current yield curve inversion being considered an industry negative - I don't see it that way as long duration mortgages are no longer as dominant on bank books: Shorter term loans and investments have become more conspicuous on bank balance sheets. Therefore, asset durations have been shortened, lessening the impact of an inverted curve.

4. Banking industry asset tests are unrealistic and too restrictive/stringent. In reality, industry capital is in excess and company repurchases are very accretive to EPS. As the economy recovers in 2024 and forward, it is likely that asset tests will result in regulators allowing more aggressive capital asset strategies.

5. With solid balance sheets and large technology expenditures materially behind them, large U.S. banks have deepened their moats by expanding their franchises and market shares at the expense of non US financial institutions and emerging fin tech players that have materially disappointed their stakeholders.

6. Remember, some inflation is good for banks - as nominal growth is more important than real inflation adjusted growth! Nominal buoys loan, asset and deposit levels.
7. Second quarter results showed the benefit of the recent climb in interest rates - strong growth in NII will be a feature of 3Q2022 and second half results.

8. While credit costs will be rising somewhat, quarter over quarter - loss rates and reserve builds will likely still be very low as debt excesses are contained, consumers have large imbedded and unrealized gains in their homes and in stocks. Our financial system is strong when compared to other economic downcycles.

9. Capital market and mortgage related revenues/profits are already known to be weak - and for obvious reasons: market price declines, slowdown in home turnover, weak investment banking. Nevertheless I vastly prefer banks to brokerages, are less asset sensitive as the later do not benefit from the marked accumulation of industry savings accounts, and the inevitable advance in net interest income.

10. Finally, most large money center banks have an important presence in the consumer banking and mortgage markets. I do not share the dire expectations for the consumer in light of the still healthy housing market, the large unrealized cushion of gains in both equities and in the housing stock, coupled with very low "locked in" mortgage rates of about 3%, and a strong jobs market. 

Bottom Line

At the core of my optimism regarding financial stocks are my expectation for greater macro clarity of a mild and brief recession, contained credit issues, a solid labor market, a relatively healthy consumer armed with large unrealized gains in equities and in the housing stock, a still healthy housing market, a view towards higher interest rates (for longer), a strong and under levered U.S. banking industry/system with healthy structural economic underpinnings and, as a starting point, low relative (0.5-0.6x) and absolute valuations (8-9x)

My advice is to be opportunistic and to avoid the rear view mirror, the consensus and the downbeat emotions that are the natural byproduct of lower bank stock prices over the last month.

I am now aggressively embracing the weakness in financial stocks - with an eye on a multi-year investment that could take the group much higher when fears of a deep recession recede.

* The exchange traded fund JOET provides a rules-based, opportunistic and actively managed style of portfolio management run by a long time pal, Joe Terranova

* Terranova is a seasoned, thoughtful and unemotional manager who focuses on the factor combination of fundamentals and quantitative inputs

* His strategy is ideally positioned to benefit from a changing market structure in which quant strategies and products dominate the investment terrain

With this post I am starting a new series of columns dedicated to longer term investing ideas. 

My very first investment idea for those with multi-year timeframes is the JOET ETF, run by my good pal Joe Terranova. 

Background

Formed in November, 2020, JOET is an exchange traded fund which invests in large capitalization equities with sound fundamentals and strong relative strength. 

Here is the ETF's website.  

JOET (with AUM of about $85 million) is an actively managed portfolio, managed by Joe Terranova. 

Average trading volume is approximately 50k shares daily.

The shares (3.2 million outstanding) trade at about Net Asset Value (NAV) and currently yields 0.51% - remember the portfolio has a growth orientation. 

JOET closed trading on Friday at $26.36. The 52-week range has been between $24.20-$33.31. 

Here is a list and profile of JOET's largest holdings and industry concentration:  

Top Holdings (% Fund)

(as of 09/02/2022)

Here are the factors that have attracted me to this investment: 

* A Seasoned Portfolio Manager - I have known Joe Terranova for almost two decades. Joe has been investing for over 30 years. 

The composition of JOET's holdings and the strategy employed is a reflection of Terranova's perspective on the markets. 

He is a thoughtful, rules-based, opportunistic and active manager who has a keen ability of identifying investments that produce alpha (excess returns). Importantly (at least to me!), Joe avoids dogma and emotion - he recognizes his mistakes quickly and is willing to take losses when appropriate. Stated simply, Joe Terranova is the principal reason why I feel the ETF is attractive. 

More than most, Terranova fully understands the importance of the change in market structure, in which machines and algos are the tail that wags the market's dog. As such his opportunistic approach is ideally situated to take advantage of the new regime of volatility and quant strategies' dominance. 

Terranova is especially agile and his understanding of rotation and change in market factors - that influences specific equity and industry performance - is superior to most. 

* Low Expenses - At only 29 basis points JOET's expenses are way below its peers, which average near 40 basis points, and most other ETFs. 

* A Diversified Portfolio - On average, each of the Top 10 holdings represents less than 1% of the Fund's size. JOET has 125 individual investments which are analyzed and reconstituted on a quarterly basis.  

* A Major Part of JOET's Strategy Is 'Growth at a Reasonable Price' - JOET's average multiple of its constituent holdings is about 18x and a price to sales of 2.84x. 

* A Strong Sponsor - Virtus sponsors the JOET ETF - its hard to find a stronger sponsor. 

Here is an excellent video in which Joe Terranova describes the JOET, and here is an informative portfolio/market update from late August, 2022. - Anyone seriously interested in making this investment should watch it! 

Bottom Line

Joe Terranova juxtaposes a unique combination of technical, quantitative and fundamental factors in managing the JOET ETF. 

For nearly 20 years I have admired, first hand, his perspective on the markets and his discipline in navigating volatile and treacherous markets. 

For the reasons mentioned in this column, I would buy JOET for the intermediate to longer term.

A P/E over EPS matrix from JPMorgan's Dubravko:

VALUATION - With the SPX trading ~19.2x CY22 earnings and ~16.0x FY23 consensus earnings ($244.58, according to BBG), will we see another bout of multiple compression driven by rates/yields expectations? If so, will the compression be driven by the Tech sector?  Regarding Tech, the P/E can expand even as yields go higher, which is what we have seen empirically. Also, some of the MegaCap Tech names may be viewed as less sensitive to changes in rates given their higher level of cash flow relative to other index constituents.

Sorry Jim L: 

Citigroup (C) downgrades business media fave Fed Express (FDX) this morning.

From JPMorgan: 

• BULL CASE- the bullish narrative includes these elements, (i) Fed does its last outsized (> 25pbs) hike in September, which may include ending the tightening cycle in December; (ii) QT ramps up to its maximal caps without any increase in vol or yields; (iii) CPI continues to move lower, accelerating the pace of its declines; (iv) WTI remains at/below $100 but perhaps more critically does not see rapid increases; (v) positioning increases as markets stabilize; and, (vi) yields remain anchored near-term and decrease as rates vol dissipates post-Fed.
• BEAR CASE- (i) Fed continues with its outsized rate hike cadence in Nov/Dec bringing Fed Funds above 4.0%; (ii) QT puts upward pressure on yields, retesting YTD high of 3.47% in 10Y; (iii) CPI remains in the 8% - 9% range; (iv) WTI moves back above $100, in response to either supply disruptions and/or an increase in demand from China; (v) positioning remains light with increases to short leverage; and, (vi) rates vol remains elevated as Fedspeak is hawkish and uncertainty remains over CPI direction/magnitude.

P.S. - As I will note today or tomorrow in a lengthy strategy piece, I lie somewhere in between trading sardines, not eating sardines in a likely range bound S&P Index (3825-4225).

Second Chart:

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zerohedge

@zerohedge

Germany Announces Another €65BN Energy Stimulus Even As ECB Seeks To Crush Demand

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From Bramo:

10-Year Yield vs. Tech P/E

As I have written, I can't see the U.S. as an oasis of prosperity in a flat and interconnected world:

More bad news for long-time short Digital World Acquisition Corp.  (DWAC) . 

The shares have fallen by $5 or 20% in premarket trading.

Morgan Stanley's Wilson presses his negative view:

* The market (and money) never sleeps -- and neither do I, it appears!

* Stock futures were higher all evening -- reversing Friday's fall.

* Brent crude is down again, -$2.05, to $93.61.

* Gold is flat and still can't get out of its way. I still can't work it up to buy.

* Soft commodities are mixed.

* Bond yields are broadly higher after barreling ahead in recent days. The yield on the 10-Year is +6.5 basis points to 3.258%. I added to Treasuries on yield strength all week.

* The S&P oscillator remains oversold, at -8.7% . The oscillator has been a good short-term trading tool over the last few months!

"Workin' on our night moves
Trying to lose the awkward teenage blues
Workin' on our night moves
In the summertime
And oh the wonder
Felt the lightning
And we waited on the thunder
Waited on the thunder."

- Bob Seger, "Night Moves"

I described the importance that overnight futures trading holds for me here. It is a guidepost to my strategy in the regular trading session.

Moreover, the overnight/early morning futures hold opportunities as they are (1) inefficient, though liquid, and (2) it seems fear and greed is often exaggerated outside the regular trading session.

Stock futures are higher.

Brent is -$2.05/barrel.

Soft commodities are mixed.

The 10-Year U.S. Note yield is +7 basis points at 3.25%. I continue to buy Treasuries.

S&P futures peaked at +37 and bottomed at -7. At 5:34 a.m. ET futures were +22 handles.

Nasdaq futures peaked at +137 and bottomed at - 52. At 5:36 a.m. ET futures were +94 handles.

Here is a synopsis -- and link -- to some of my columns I believe were important. The intent is to review the logic of my market moves and other factors.

I was out on Friday, and didn't write.

Here are my trades from Friday (from The Comments Section):

dougie kass • 4 days ago

aggressively bought this dip....
dougie