Financial News vs. Noise
The most interesting thing out of Friday was rates coming down and precious metals going up. NVDA earnings are important, but again I believe not as important as they were last May. I still believe the market will end up being all about rates and you should be watching the 10 yr and the precious metals. I figure at some point it has to matter that Fed Funds Futures are now only pricing in 87bps of cuts this year. For the moment I am betting that Friday was a one day wonder trade. I flipped short from long on TLT, cut back on GDX (still long, and also long GFI), and sold SLV. This chart still looks like an uptrend to me:
We run 5 short VIX ETP models and 2 long VIX models. All five of our short models have been in VIX ETP puts and four trigger covers on Friday (our trend following VXX model is still in puts). One of our long VIX models triggered. This is not a long term bet, average holding period on this model is a bit over 6 days. I do like the risk/return here, we are not at the lows, but we aren’t that far.
Ended up getting out of COIN Friday, so the our only holding in crypto is now CLSK. Starting to see some more platforms OK the spot bitcoin ETFs and I do think these are a game changer, but I think these names need to settle down a bit.
Our SMCI model triggered a buy signal on Thursday, which I over rode. I did but a bit on Friday. The options on it are juiced so it’s a tough one to trade, kicking around the idea of doing a 2x single stock ETF on it.
Planet Fitness (PLNT) is a name that should be impacted by the weight loss drugs (thank you Larry Connors for pointing it out to me). We ended up shorting it on Friday. Rejected at the 200 day and looks like it could fill the gap to the downside.
Just about everything looks overbought at the moment, except maybe industrial metals, solar’s, and some emerging markets. Still trading the same areas—Mag 7, AI, weight loss, Argentina, precious metals, etc, would love to see things settle down a bit. It is worth noting that Warren Buffett released his annual letter and doesn’t seem to see any good values out there:
“There remain only a handful of companies in this country capable of truly moving the needle at Berkshire, and they have been endlessly picked over by us and by others. Some we can value; some we can’t. And, if we can, they have to be attractively priced. Outside the U.S., there are essentially no candidates that are meaningful options for capital deployment at Berkshire. All in all, we have no possibility of eye-popping performance.”
As far as data this week PCE will be the most important reading as it is the Fed’s preferred inflation indicator.
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Matthew Tuttle is the Chief Executive Officer and Chief Investment Officer of Tuttle Capital Management, LLC.
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