DAILY DIARY
Very Quiet Volume ...
Check out the low volume:
- New York Stock Exchange volume was 368 million shares, 14% below its one-month average;
- Nasdaq volume was 3.54 billion shares, 27% below its one-month average
- VIX: -0.24% to 12.73
NYSE Highs: 36 Lows: 19
Nasdaq Highs: 40 Lows: 56
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The Fed Whisperer
Not Broadening
Hmmmmm
Better Luck Next Time
My Ludacris Forecast that the market would sell off was, well... Ludacris!
S&P Index
The ratio of emerging markets to the S&P Index is at a 23 year low:
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Programming Note
I have a lunch meeting from 12:30 pm to about 1:45 pm.
Radio silence.
Minding Mr. Market
As noted earlier, equities continue their VERY low volume and narrow advance this morning - and I am using the strength to get larger in net short exposure.
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The market is not broadening - the equal weighted S&P is lower (RSP is -0.25%), as is the Russell Index weaker (-0.40%) and beginning to show signs of rolling over.
Financials are leading to the downside - another red flag. The credit card companies - we are short (COF) and (AXP) - in particular are downside leaders.
Mag7 is getting frothy, led by (MSFT) , (NVDA) and (META) .
I see storms ahead.
Another Advance on VERY Low Volume
- NYSE volume 120M shares, 22% below its one-month average
- Nasdaq volume 1.13B shares, 36% below its one-month average
Breadth
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Biggest Movers
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Heat Map
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S&P 500 Index
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Occidental Bid
I am aggressively bidding for (OXY) calls, in and out of the money at various expiration dates.
Bespoke
Ludacris Forecast
A large down day - see last post.
But probably Ludacris.
Strange Brew
Something very weird is happening in the world of systematic trading this morning.
The buying in mega tech is extreme and strange.
More to come...
Adding to my short exposure.
An Oldie But a Goodie
* Why I would continue to avoid bitcoin...
I Remain an Outspoken Bitcoin Bear
Given the recent plunge in bitcoin and other cryptocurrency prices I wanted to repost four columns I wrote over the last 12 months ago in which I strenuously warned about lower crypto prices:
From June, 2021:
Jun 08, 2021 ' 08:00 AM EDT DOUG KASS
Bitcoin's Arrested Development
* "What is your return policy, by the way?"
* The price of bitcoin is down another -$2,600 (or -7% ) this morning after the Department of Justice recovered the Colonial Pipeline ransom
* The recovery pricks the anonymity and safety arguments of bitcoin devotees
* I remain manifestly bearish on Bitcoin
"Dead Dove, Do Not Eat. I don't know what I expected... You didn't eat that did you? Cause I have only a couple of days to return it."
- Arrested Development
My ursine view of Bitcoin is well known by subscribers:
As I have written:
"The problem with fiat currencies, like the U.S. dollar, is that monetary authorities can create an unlimited amount of new dollars or other currencies - making it look, to some, like a Ponzi scheme.
The problem with cryptocurrencies, like Bitcoin and Ethereum, is that anyone can make an unlimited number of new cryptocurrencies- making it, too, look to some like a Ponzi scheme. Ponzi schemes and scams are only visible to those that have no sense of history or want to believe in magic.
I believe cryptocurrency is like Tinkerbell's light - its power source is based solidly on enough children believing in it."
Over the weekend, uber smart Jack Dorsey said (at the Bitcoin 2021 Conference in Miami):
"Bitcoin changes absolutely everything. I don't think there is anything more important in my lifetime to work on... if I were not at Square or Twitter, I would be working on Bitcoin."
Who am I to argue with Jack (who founded both Square and Twitter)?
Nevertheless, though some real smart people (like @Jack) are committed to Bitcoin - as you all know, I have expressed that I can't think of a bigger game of hot potato than digital currencies (h/t Smails).
A few hours ago it was learned that the U.S. government recovered most of the ransom ($2.3 billion) stolen from Colonial Pipeline by the Russian hacker ring DarkSide ("ransom ware as a service") apparently by taking over the rented server that housed the virtual currency wallet holding the ransom.
The response, below, from the Department of Justice is important as it relates to the view of Bitcoin's "safety":
"The sophisticated use of technology to hold businesses and even whole cities hostage for profit is decidedly a 21st century challenge... But the old adage, follow the money still applies."
- Deputy Attorney General Lisa Monaco
This raises the question (first brought up by Mikey in our Comments Section) as to what makes Bitcoin safer than fiat money? Where is the secrecy that forms one of the arguments in favor of Bitcoin?
So, if as reported, the U.S. Government took over a rented server housing the Bitcoin wallet of the monies paid by Colonial Pipeline - why does this make Bitcoin different than fiat money?
The answer might be that the safety factor, previously thought to exist, is simply not there as Bitcoins were confiscated in a designated wallet.
Most had thought that Bitcoin was impenetrable - that holding crypto in your own wallet was fail safe.
Does this prove that if a human creates something, another can break it?
Bitcoin's Price Is Under Pressure
The price of Bitcoin has been rolling over for months.
The Bitcoin/gold ratio has been under very real pressure since early February. It was near 40 to1 nearly four months ago and it's under 20 to 1 now (to 17.4:1).
I would not be surprised if the ration goes to 10 to 1 shortly and, ultimately, maybe even lower.
Bottom Line
Like wrestling icon "Rowdy" Roddy Piper, "I have come here to chew bubble gum and kick ass... and I am all out of bubble gum."
Despite protestations from some very intelligent digital currency observers, I remain a Bitcoin bear.
From December, 2021:
Dec 06, 2021 ' 08:30 AM EST DOUG KASS
I Still Don't See the Value Proposition in Digital Currencies
* Over the weekend the price of Bitcoin and other digital currencies plummeted
* To me, digital currencies remain just another risk asset and not a bonafide medium of exchange/trade
Over the weekend, the price of many cryptocurrencies fell by almost -20%.
Bitcoin has now dropped by -38% from its recent high - that's the third correction of greater than -30% in the last 12 months.
Here is a history of the major corrections in Bitcoin over the last 11 years:
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Mark Twain taught us that history doesn't repeat itself but it often rhymes.
The same applies to market history.
Four years ago Bitcoin futures started trading - the euphoria was short lived and the price of Bitcoin eventually dropped by over 80%. Since the start of the first Bitcoin futures ETF in October, 2021, the price of Bitcoin is -38%:
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What are digital currencies, if they can be created ad hoc - like monetary presses - and produce an endless supply?
Why are digital currencies better than fiat currency if their supply is really not fixed.
What value do digital currencies have if:
* They provide no protection from rising inflation seen in the last few months.
* They have provided no protection from deflation in the past.
* They have provided no protection from geopolitical events.
* Most cannot be seamlessly used as a currency or as a medium of exchange of trade.
* The lack of price stability and consequences of price volatility make digital currencies unsuitable as a medium of exchange for trade.
* They are tax inefficient.
* They are vulnerable to regulation.
* They are vulnerable to the competitive threat of sovereigns creating their own digital currencies.
* They have no intrinsic value nor do they provide any cash flow.
I recognize that many very intelligent investors that I respect (like Paul Tudor Jones, Elon Musk, Anthony Scaramuuci) and even some countries have confidently made large commitments to digital currencies.
I am not a luddite, but, sorry, I just don't "get" digital currencies and I don't see the value proposition.
There... I have said it.
For several years cryptocurrencies have taken the oxygen out of the gold room - and many long term and strongly committed investors in precious metals have begun to lose confidence in gold and silver.
Gold has been around, though thick and thin, for thousands of years.
Bitcoin is only 13 years old and other digital currencies are still infants.
But we don't know what Bitcoin and other digital currencies will look like when they grow up.
There... I have said that also.
From January, 2022:
Jan 25, 2022 ' 08:30 AM EST DOUG KASS
I Call BS
My friend Mooch is on CNBC discussing the merits of Bitcoin and why the drawdown of over 50% should be ignored.
These days there is no discussion ever of crypto as a medium for exchange or trade - not surprising, considering its volatility.
Mooch's rationale and the argument of many other devotees is that more individuals and institutions will accept/buy the asset class.
Isn't that the definition of a Ponzi scheme?
And from April, 2021:
Apr 23, 2021 ' 08:15 AM EDT DOUG KASS
I Remain a (Non Consensus) Bitcoin Bear
* With the recent fall in cryptocurrency prices, down seven of the last eight days, the "cool kids" may be getting worried now
* Are cryptocurrencies a giant fraud?
* From my perch, and minority viewpoint, cryptocurrency holders are more lemmings than soothsayers
* Bitcoin is trading -$4000 in the early going and Coinbase is trading below $285/share in premarket trading
* The shares of speculative crypto gewgaws are getting routed - MARA, CAN, GBTC, RIOT, MSTR, etc.
* I'm amazed so few people discuss that 2% of Bitcoin holders own 95% of the total value of Bitcoin - talk about a concentration issue!
"Surprise #7 A Decline in the U.S. Dollar Spurs an Advance In Gold (to $3,000/oz) and a Ramp of +50% in Bitcoin (to $40,000) - But Silver Is The Big Winner As It Doubles to Over $50/oz - Over easy policy, excessive liquidity, higher inflation and a rapid rollout in the Covid-19 vaccine powers the prices of cryptocurrencies and precious metals higher. Silver, however, is the league leader as the rapidly rising demand for silver in industrial applications creates a supply crunch late in the year. Another challenge on the supply side for silver is that more than half of mined silver supply is a by-product of zinc, lead and copper mining, making it tough for miners to meet the surging excess proportional demand for silver. Precious metals and crypto currency prices peak in the third quarter."
- Kass Diary: 15 Surprises for 2021
The "cool kids" may be starting to worry.
Bitcoin is trading down another -9% to about $48,500 this morning. The crypto currency has traded lower in seven of the last eight trading sessions.
My view is that cryptocurrency holders are more lemmings than soothsayers.
I have issued numerous short term and intermediate term warnings on bitcoin and cryptocurrencies in my Diary over time (See Current Affairs, "Why Cryptocurrency Is A Giant Fraud").
As you all recognize by now, I am a skeptic and cynic on cryptocurrencies and on primary, secondary and tertiary cryptocurrency equity plays.
This view has become a non consensus one - as acceptance has risen geometrically over the last 6-12 months.
I am also amazed that so few people discuss that 2% of Bitcoin holders own 95% of the total value of Bitcoin. Talk about a concentration issue!
For days I wrote about a likely near term risk to the extended rally in bitcoin:
From Bespoke:
Bitcoin has been on an amazing run, but it is now on pace for the first close below its 50-DMA since last October. That's the longest streak since at least 2014.
But my concerns run deeper than just observing about an extended rally in cryptocurrency prices - and I have profited by shorting the speculative crypto gewgaws like (MARA) , (CAN) , (GBTC) , (RIOT) , etc. - some of which have been favored by some of our contributors and spectators and gamblers on Robinhood, redditt and Twitter.
I remain concerned that too many are buying the steep dips in these crypto-related stocks (as seen in our Comments Section). I continue to avoid/short - most recently in "What Could Possibly Go Wrong (With Cryptocurrencies)":
Apr 19, 2021 ' 08:25 AM EDT DOUG KASS
What Could Possibly Go Wrong (With Cryptocurrencies)?
* There are now over 100 Crypto Assets worth over $1 billion (that's a new record)
* Dogecoin, which started as a joke, hit a $50 billion market capitalization on Friday
* Investors want to believe in the value of cryptocurrencies, in the prophesies of Tesla's Elon Musk, and in the "problem free" momentum of the liquidity-based stock market
* It might be time to tug on Superman's cape
* A tweet that suggested the U.S. Treasury would mount a regulator attack on cryptocurrencies resulted in a near 20% decline in the price of bitcoin over the weekend (it has since recovered some of the decline)
* It remains my view that we have the most uneducated trading and investor base in history
* And the problem and danger is that too many have not learned from that history
"Uptown got it's hustlers
The bowery got it's bums
42nd street got big Jim walker
He's a pool shootin' son of a gun
Yeah, he big and dumb as a man can come
But he stronger than a country hoss
And when the bad folks all get together at night
You know they all call big Jim boss, just because
And they say
You don't tug on superman's cape
You don't spit into the wind
You don't pull the mask off that old lone ranger
And you don't mess around with Jim"
- Jim Croce, You Don't Mess Around With Jim
The problem with fiat currencies, like the U.S. dollar, is that monetary authorities can create an unlimited amount of new dollars or other currencies - making it look, to some, like a Ponzi scheme.
The problem with crypto currencies, like bitcoin and ethereum, is that anyone can make an unlimited number of new crypto currencies - making it, too, look to some like a Ponzi scheme.
Ponzi schemes and scams are only visible to those that have no sense of history or want to believe in magic.
In the magazine Current Affairs, a recent article, "Surely We Can Do Better Than Elon Musk", critically evaluates Elon Musk's ideas and promises. As written, it seems that every few months Tesla announces some seemingly hare-brained schemes and pundits sing Elon Musk's praises without much scrutiny about whether it could work (it often doesn't!).
Crypto fits the description of Elon Musk, too. There is no scrutiny of anything nowadays. Just look at the price charts of GameStop (GME) , Discovery (DISCA) , ViacomCBS (VIAC) and AMC Entertainment (AMC) .
For sure when the U.S. government decides to print another $5 trillion of new debt it has no clear plan to pay it back - so that our currency loses its scarcity cred. Crypto's innovation is its ability to create what Professor Galloway calls "credible scarcity." But, the chart of over 100 cryptocurrencies with a market cap of over $1 billion stretches that scarcity cred, too, just like the U.S. dollar. I still favor silver and gold at these levels.
A Sense of History
History rhymes. The speculative activity of 2007-08 was centered in mortgage plays - private mortgage insurance, originators, etc. The spec activity in 2020-21 is centered in crypto mining and leveraged bitcoin balance sheets.
Bells are not rung at the top but sometimes the largest IPO ever of a company (Coinbase) that many have not heard of months ago is a signpost.
Coinbase (COIN) was recently taken public through a direct listing with a meaningless, head fake "reference price" -- in a Twitter-like attempt to see if investors are stupid enough to believe what the investment banker earnestly says. (Here is my negative investment thesis on Coinbase, "Avoid Coinbase - Especially On and After The Opening Trade") The shares closed the first day at an almost $100 billion valuation - making it nearly as valuable as Goldman Sachs (GS) and about $65 billion less than the combined $170 billion market cap of The Intercontinental Exchange (ICE) , The Nasdaq, and The CME Group (CME) .
From Professor Scott Galloway:
"Direct listings have become a transfer of wealth (the "pop") from institutions to VCs who fling feces at tourists to the Unicorn Zoo."
And, to that end, here are the insiders that sold on the day of the direct listing (while ARK Invest's (ARKK) Cathie Wood was, not surprisingly, buying(!) here and here. She added another 200k shares of Coinbase on Friday):
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Bottom Line
"Anyway, it's likely that the Wall Street firms, realizing they ceded too much of a head start to compete on the whole "innovation" thing, will weaponize their lobbyists to convince regulators to shift their gaze away from SPACs (harmless fun) and focus on the existential threat(s) of crypto... Prediction: congressional hearings on crypto where committee members make the previous hearings on big tech look elegant and informed."
- Professor Scott Galloway, No Mercy/No Malice ("A Unifying View of Everything")
Several factors have lined up to make traders and investors the least educated in history:
* The introduction of so many newbie traders that now can trade without paying commissions.
* Federal stimmy payments have accelerated the trend of new trading activity.
* The evolution of market structure - from active management to passive management (ETFs, quant strategies - like Risk Parity), has created a landscape and large universe of those that worship at the altar of price momentum. This has, arguably, resulted in a degree of artificiality of prices and limited real price discovery that I have rarely seen in my investment career.
This will not likely end well. It already has not ended well for traders in speculative gewgaws ( (RIOT) , (MARA) , (CAN) ) and like SPACs which, until recently, were delivered like rifle shots from the investment banking community on a daily and unprecedented basis (Chamath Who?).
This weekend's near 20% drop in bitcoin (based on a single Tweet of regulatory concerns related to the U.S. Treasury) may have been the first shot across the cryptocurrency bow - which has stretched its scarcity cred with the exponential growth in the number of different cryptocurrencies.
It might be time to tug on Superman's cape as my bet is that more shots are to come in the rapidly increasing universe of hundreds of different cryptocurrencies... and to the U.S. stock market, as a whole.
Here are some more objections I have recently voiced in print about cryptocurrencies:
* Avoid Coinbase, Especially On and After The Opening Trade
* Gewgaws=Schmissburgers
* No Good Reason To Buy Bitcoin Except Price Appreciation
* More on "Group Stink"
* Move Over Reddit/WallStreetBets, There's a New Kid on the Block!
* The Harder They Come The Harder They Fall
* Microstrategy's Gimmickry
* Another Sign of a Speculative Top in Bitcoin
* Nouriel Roubini on Bitcoin
* Sorry This Makes No Sense, Dan
* Attention Bitcoiners!
* Whitney Tilson on Bitcoin and Plug Power
* I Now See a Possible Short Term Bearish Signal for Bitcoin
* About Bitcoin
Most notable is my strong view that bitcoin is not a trade medium for exchange or a currency:
Feb 10, 2021 ' 07:55 AM EST DOUG KASS
Bitcoin Is Not a Trade Medium or Currency
After Tesla's (TSLA) purchase of $1.5 billion of bitcoin the story making the rounds was that many corporate treasurers will move sizeable amounts of their cash hoards into bitcoin. That development, in turn, would levitate the price of bitcoin further.
However, bitcoin remains a speculative, reserve asset class, and perhaps as a reaction to the Fed's insanely reckless policies, and one that is not yet a reliable currency for trade given its volatility.
An asset which is so volatile is not a prime candidate for trade currency nor is it a dependable cash equivalent.
Corporate Treasurers are unlikely to readily "invest" their cash in bitcoin owing to the volatility and its rapidly changing value and impact on a company's quarterly results and balance sheet. For companies, cash is typically used for short term liquidity. So, buying bitcoin becomes a different mandate and, for sure, is not a cash equivalent with respect to the purpose of a balance sheet or as seen as a "rainy day fund."
Bitcoin has tripled in the last few months and is up ten fold in the last year. So, if I paid $1 million in bitcoin for a piece of real estate 12 months ago, I have given up nearly $10 million based on the appreciation of bitcoin. The seller, if he didn't sell his bitcoin, is $10 million richer!
As I said before, extreme volatility doesn't equate to a suitable currency for trade.
Recently, the speculative cryptocurrency equities and their share prices (e.g. (MSTR) , (RIOT) , etc.) are moving disproportionately from the gains in the value of bitcoin and more from the "promise" of broader adoption of crypt currencies.
I do not see that happening on the scale the market expects given the asset class' volatility.
Oil Vey!
I sense some consternation regarding the weakness in energy stocks recently.
In fact, some are getting a bit emotional in their frustration. (No bueno!)
These are investments and not trades for me and I welcome the weakness.
On Monday and Tuesday's poor action, I lifted my long energy exposure further:
Today's Buys
Buys today: (XOM) , (OXY) and (CVX) .
And I made Occidental Petroleum (long) my Trade of the Week:
Trade of the Week: Long OXY $57.52
Energy stocks are unpopular these days as investors are fully preoccupied with large cap tech.
As evidence to this, today, despite a near +$2/barrel rise in Brent crude, all oil-related equities are weaker in the trading session.
A Berkshire Hathaway Put?
With Occidental (OXY) we have some takeover optionality away from the price of oil - reflecting Berkshire Hathaway's (BRK.A) (BRK.B) continuing interest.
Berkshire purchased over ten million shares less than one month ago.
The shares have declined by about $5/share in recent weeks.
I like the reward v. risk at the current share price.
In fact, I am back purchasing calls on the name.
Selected Premarket Movers
Upside
-CMND +35% (completed Type A meeting with FDA related to clinical trial of proprietary MEAI-based, CMND-100 compound, for treatment of Alcohol Use Disorder treatment)
- (ICCT) +17% (acquires Insurance verification company Verifi Dental; no terms disclosed)
- (AMRN) +14% (reports prelim Q4 revenue; to initiate $50M share repurchase program)
- (SGH) +11% (earnings, guidance; Board approves $75M share repurchase program)
- (TGTX) +10% (reports prelim Q4 BRIUMVI revenue; provides 2024 guidance)
- (PSMT) +8.9% (earnings)
- (XERS) +7.1% (enters exclusive Worldwide License Agreement for Xeriject formulation of Teprotumumab)
- (WDFC) +6.5% (earnings, guidance)
- (CCCC) +5.3% (announces 2024 priorities and extended cash runway to advance portfolio of targeted protein degradation medicines)
- (TOST) +5.1% (Goldman Sachs Raised TOST to Buy from Neutral, price target: $24)
- (ISRG) +4.9% (reports prelim Q4)
- (BE) +3.2% (Baird Raised BE to Outperform from Neutral, price target: $22 from $16)
- (ATRO) +2.8% (guidance)
- (PIII) +2.2% (affirms FY23 guidance, provides initial FY24 revenue guidance)
Downside
- (AEHR) -17% (earnings, guidance)
- (ACRS) -12% (4-week Phase 2b Trial of ATI-1777 for Mild to Severe Atopic Dermatitis met primary efficacy endpoint, but not statistically superior)
- (MDRX) -11% (cuts FY23 guidance)
- (CAMP) -6.6% (earnings, guidance)
- (CHWY) -5.4% (hearing 12.3M share block shopped)
- (BECN) -2.0% (reports prelim Q4, provides initial FY24 guidance)
From The Street of Dreams (Part Deux)
Here are some sell-side comments about stocks I am involved in - long and short:
Chewy price target lowered to $36 from $40 at Goldman Sachs Goldman Sachs lowered the firm's price target on Chewy to $36 from $40 and keeps a Buy rating on the shares following a transfer of coverage. The firm sees a continued shift of consumer budgets away from discretionary goods and towards essentials and services, and it expect that the competitive pressure from Asia-based e-commerce platforms that picked-up in 2023 will only intensify in 2024, representing a headwind to growth and margins. Goldman believes that consumers will continue to concentrate their spending with scaled platforms that can offer a wider assortment, sharper pricing and faster shipping times, at the expense of smaller players.
Chewy price target raised to $17 from $15 at BofA BofA analyst Curtis Nagle raised the firm's price target on Chewy to $17 from $15 and keeps an Underperform rating on the shares. The setup for small-to-mid cap Internet stocks in 2024 is more constructive compared to the start of 2023, but this is baked into valuations, the analyst tells investors in a "2024 Year Ahead" note for the group. By subsector, BofA prefers e-commerce over subscription services, the analyst says, adding that online real estate is most levered to lower rates, but the firm expects a gradual recovery in home sales in 2024.
Freshpet price target raised to $105 from $88 at TD Cowen TD Cowen analyst Robert Moskow raised the firm's price target on Freshpet to $105 from $88 and keeps an Outperform rating on the shares. The firm raised its target after meeting with management who sounded noticeably more relaxed about how the business is functioning. The supply chain operated smoothly throughout the year while continuing to ramp capacity. The company continues to strengthen its management team with outside talent to support its growth.
American Express price target raised to $216 from $184 at AXP Barclays raised the firm's price target on American Express to $216 from $184 and keeps an Overweight rating on the shares. The firm favors (SLM) in the consumer financial group, thinking it is the "cleanest name" into the print, and continues to like American Express (AXP) and OneMain Financial (OMF). However, it thinks setup into the Q4 prints may be more challenging given valuations are now closer to historical averages.
More Night Moves: A Detailed Look at Overnight Futures and Why/What Markets Are Moving
* The market's resilience continues and I continued to expand my short exposure in early premarket trading
* Investor sentiment remains bullish, though the recent market weakness has resulted in a turn down from deep overbought to more modestly overbought -- the S&P Short-Range Oscillator is down to 0.41% from 2.35%
* This morning yields are lower, crude oil prices higher, reversing from early losses, and stock futures are relatively flat
* The U.S. dollar is rising against the euro
* I have been waiting for Wednesday:
"Waiting for Wednesday, my stomach doesn't hurt enough,
Pain always is the sign.
Waiting for Wednesday, no proof of mine exists,
So l don't have to take it back."
- Lisa Loeb, "Waiting for Wednesday"
"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"
This daily Futures feature is like inside baseball. I try to show you and write about what I believe thoughtful hedge fund managers are looking at when they awake -- let's call it our normal routine -- setting the stage for their strategy for the day. The market is a complicated mosaic and the more info you have, the better trader and investor you will be!
The market (and money) never sleeps -- and neither do I, it appears! I have previously described the importance that overnight futures trading hold 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 are often exaggerated outside the regular trading session. I frequently try to capture those efficiencies by trading actively both in the pre- and after-market sessions.
Here are brief observations I wanted to highlight and provide a summary of overnight price movements in various asset classes:
* Stock futures are materially unchanged. S&P futures peaked at +12 and bottomed at -6. Nasdaq futures peaked at +78 and bottomed at -24. At 7:48 a.m. ET, S&P futures were flat and Nasdaq futures were -12.
and...
* Commodities are mixed. Brent crude is up $0.26 to $77.85.
* The S&P Short-Range Oscillator is moving back to neutral after being overbought for a week or so. Now at 0.41% v. 2.35%.
* The VIX is up to 12.88 (+0.12).
* The U.S. dollar is higher against the yen and modestly lower vs. the sterling and euro.
* Treasury yields are reversing yesterday's weakness. The 2-Year Treasury yield is -3 basis points at 4.343% and the 10-Year is -1 basis point at 3.998%.
Remember what I wrote in my 10 Surprises for 2024:
The yield on the 10-year Treasury, which today is at 3.9%, never declines below 3.75% and fluctuates between 3.75% and 4.75% most of the year. A developing US recession, late in the year, sends the budget deficit as a percentage of GDP to 10% or more -- overwhelming Treasury supply and sending the 10-year yield back above 5%.
The U.S. federal debt problem is no longer shrugged off by investors -- it looms larger in late 2024 and slowly becomes a serious systemic problem in the years ahead.
Over there, the yield on the 10-Year U.K. Gilt bond is up 1 basis point.
* Overnight, the inversion of the 2s/10s Treasuries curve is moving lower to -33 bps.
* Gold is up $6 at $2,039.
* Bitcoin is -$150 to $45k.
Here is a synopsis of some of my columns I believe were important, or in the event you were out for the day and/or did not read my Diary. The principal intent is to review the logic of my market moves and other factors:
My Recipe? Trading Opportunistically
Not a Market for the Uninformed or Emotional
Be Fearful When Others Are Greedy
McDonald's Is a Dog With Fleas
Downside Leadership in Financials
Here were Tuesday's trades:
* Out of (MSOS)
The Relationship Between Equity Returns and Unemployment
An important Tweet:
El-Erian on Rising Shipping Rates
My Tweet of the Day
Recommended Viewing
If you want to learn about the artificial suppression of volatility that is allowing speculation to flourish and make things look more stable than they really are... watch this fantastic podcast.
A special thanks to BadGolfer for calling my attention to this interview!
Themes and Sectors
This table is a valuable resource for momentum-based short term traders:
View Chart »View in New Window »
From The Street of Dreams
From JPMorgan:
US: Futs are higher, led by Tech. Mag7 names are among the best pre-mkt performers, led by NVDA, +1%. Bond yields are lower with a weaker USD. Cmdtys are mixed with strength seen in gasoline, natgas, ally, precious, and sugar. Today is a light macro data day with mtge applications and wholesale data; it may be a "calm before the storm" type of session led by idiosyncratic stories ahead of tmrw's CPI print and Friday's bank earnings. The Fed's Bowman had a dovish clarification of her previous day comments; the view remains data-dependent.
and...
EQUITY AND MACRO NARRATIVE: Today's note is focused on the Friday's banks earnings preview, 2024 themes, and a repost of the CPI scenario analysis. Yesterday's price action was interesting to see folks buying the dip and makes me wonder if see more investors move to a bullish stance if CPI prints inline/dovish and earnings season delivers above expectations. There remains a large group of investors who view the inverted yield curve as too powerful a signal, believing that a recession is imminent and are thus bearish until you see the Fed deliver multiple cuts. My view is aligned with JPM Econ in that a recession in 2024 is a lower probability event and that the strength of the household and corporate sectors continue to slow the Fed-induced growth decline.
More From Barchart
Charting the Technicals
"The market is the best fundamental analyst out there."
- David Lundgren
Bonus: Here are some good links:
* "Jazzy" Jeff Hirsch On The First Five Days
Caution, Caution
" Nothing like price to change sentiment."
- The Divine Ms M
Premarket (Before 5 AM) Trading
* Cause money never sleeps...
With stock futures sharply reversing a modest evening downturn - from (-5 spoos) red to green (+9 spoos!) - at around 4 am, I am expanding my Index common short trading rentals:
* Shorted (SPY) common $474.70.
* Shorted (QQQ) common $407.44