It's Complicated
Knowing When & Why To Pivot
Chasing What’s Under-owned
Price Drives Narratives
Flows Over Fundamentals, Part 2
Knowing When & Why To Pivot
I didn’t know my well-timed correction in February would bounce at VIX 35 and SPX 6317, but I did have 6508-to-6416 overshoot as downside targets from $6998.
And once the S&P got back above my often-telegraphed SPX pivot of 6508, I highlighted the bounce probabilities and how to play - including the value-to-growth rotation call - specifically calling for XLE (the energy sector) to digest even before tech bounced on Trump’s ‘ceasefire’ headline that caused energy plays to fall and tech plays to rise!
I also review my growth/value rotation call for members daily - noting strength even before the recent melt-up - but I did not call for a meltup. I didn’t see that.
Reminder: From my APRIL 6TH client post (before the headline of a ceasefire ignited the bulls):
“Mechanical buyers can step in IF price rises to above the gamma flip level (~6650).
CTAs are modelled to buy USD148bn of global equities over 1 month (USD47bn in the US alone)
Point is: Right-tail risk enters the conversation, again, once we get above - and despite war escalation (and US isolationism) afoot with ground troops deploying to the Middle East for more conflict.
Why? Because upside calls or call spreads in MAG7 names give you the hedge to your downside protection.
I don’t make the rules.
But I can remind a really basic one: Trends need fundamentals for conviction (read: organic) buyers to keep the bullish momentum in play.
Or intervention. Like real, lasting, trusted peace. And what are Vegas odds of that?!”
I followed up for clients with updated levels, APRIL 8TH:
“A reminder: I called for MARKET STABILIZATION last week into END OF THIS WEEK.
By stabilization I said “6500-6800 SPX” - that’s your range.
It could have gone very badly which is why I recommended you KEEP YOUR HEDGES and buy cheap upside calls/call spreads ”
I gave my updated SPX to $6900 call last week and 6945 Monday:
The point is: I don’t want any client hurt from me being wrong, but I also let clients know when I have HIGH CONVICTION versus IF-THEN.
And when mechanical flows enter, I let you know the IF-THEN or LEVEL-BY-LEVEL so you can better POSITION, PROFIT & PROTECT.
I make best efforts to assemble & synthesize the MACRO-FUNDAMENTAL-QUANT-SENTIMENT-TECHNICAL-INTERMARKET read, so I can give you every facet of the market’s direction, sector rotation and stock selection with highest conviction. But if I don’t know, I take it one level at a time.
I work hard to stay in sync with all the facets and factors that influence market direction - and I work hard to pivot when the music changes beat - but I can often underestimate the INTENSITY & TIMING of a move, even if I get direction right.
And speaking of timeframes, it’s complicated!
I still contend, big picture “Headline-triggered algos triggering gamma squeeze, short covering and VIX compression seems like a bottom to the next breakout to all-time-highs, but to me it seems like a typical albeit violent bear market rally” in the making.
Why?
