Financial News vs. Noise
Traveling to Washington DC today and tomorrow so probably no note tomorrow.
Today is Fed minutes at 2 and then NVDA earnings after hours. Yesterday we had the second of two red days in a row, I don’t believe we have seen that this year. SPX broke it’s 10 day but is holding support at the 20 day EMA.
Regardless of all the doom and gloom, still looks like an uptrend to me. 10 yr rates, which I think are the tail wagging the dog, came down.
Some interesting reporting out about rates. This from Bloomberg Cracks Start to Emerge in Global Central Bank Synchronicity. The article talks about potential rate hikes in Australia and New Zealand and cuts in Europe. Then you have this also from Bloomberg, which I don’t believe but would have obvious ramifications: Markets Start to Speculate If the Next Fed Move Is Up, Not Down.
I am certainly less bullish than I was pre PPI and could become even less so depending on today’s data. However, until proven otherwise I think you continue to play the themes I have set out—buy Mag 7 on dips, trade crypto, trade China, Argentina, AI, weight loss drugs, etc.
As far as the Magnificent 7 goes this is interesting but probably doesn’t tell you a ton. I’m assuming they get this data from 13F filings. Remember 13Fs are just a snapshot in time. Could mean that they are getting bearish, could mean they are trying to broaden out, or could mean that on the report day they just held less of these names.
Hedge Funds Cut Magnificent Seven in Last Quarter, Goldman Says-Bloomberg
Yesterday was tough as only GOOGL was green and NVDA and TSLA got crushed. As our biggest ETFs are 2x long TSLA and 2x long NVDA it was extra painful, interestingly we did see inflows though. NVDA move is interesting as it sold off hard a day ahead of earnings. Probably can’t read anything into that. AMZN is replacing WBA in the Dow and it’s up premarket. Not sure anyone benchmarks anything to the Dow so don’t really care that much.
The drop in SMCI may have been a canary in the coalmine for more speculative stocks as they got crushed yesterday. The crypto miners in particular sold off. We got out of MARA and CLSK but still hold COIN and BITO.
Not sure what to make of what’s going on in precious metals. Gold was up with silver down yesterday. We did add to our gold miners position and now have GDX, XLV, and GFI. Don’t think this is the main area to play at the moment, however Fed minutes could make things interesting.
Keep an eye on this. I never think investors “learn their lesson” and would expect some sort of volatility spike at some point. I’m probably short volatility 90% of the time. I do it through puts on the volatility ETPs which are crappy investment vehicles designed to go to zero. I only put in money I am ready to lose. I do have one trend following model for VXX, but most of what I do is mean reversion on UVXY. The thing to remember about vol is that when it spikes it needs the fear to still be there to continue going up. Stock-market investors fear short-volatility bets could crush the rally-MarketWatch
Some on Wall Street see risks akin to the ‘Volmageddon’ panic, while others say investors have learned their lesson
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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