- Markets are under some pressure today. There has been a lot of dispersion and volatility among various stocks and sectors. It is definitely different from 2024. No significant levels have broken in this range-bound environment yet.
- Breadth data is interesting so far in 2025. YTD, there are 323 up and 179 down within the S&P, and month to date in February, it’s nearly even 250 up and 250 down. The S&P is up 3.5% YTD and flat for February.
- The S&P briefly hit a new all-time high this week, yet only 5% of the index hit 52-week highs. That’s low.
- I have had a strong and loyal subscriber base. It’s down from its high peak in early 2023. This is not a surprise, as 2022 was a strong year for me while the indexes were horrible. Lately, I’ve seen new and past subscribers increase, with a notable increase in institutional investors. People tend to chase performance after it occurs. I suspect my subscriber numbers will increase as my PNL increases as the markets get tougher.
- My team quickly handled the recent malware issue and the site is 100% safe. Some residual issues persist for a few people, but we’re on it like Olivia Pope—damage control 101. It’s the first time it’s ever occurred for us, and it’s been stressful on my immune system, but I’ve learned a lot, and it won’t happen again.
- I added some Uranium exposure yesterday, and it’s down. I posted it on Twitter, and the same people who were critical when I was buying China tech are now critics of my uranium purchase. The sector is down hard already, and I like this for the intermediate and long term.
- My favorite long idea in China Ali Baba is now up 65%, FXI is up 19%, and KWEB is up 26%. If you bought the KWEB 33-40 March call spread for 0.50 when I recommended it (KWEB was 29). Continue to trim and take monster profit. My options trades are not factored into the Trade Ideas PNL. If they were and I might one day, we’d be showing a 10% ytd gain. Getting correct daily pricing is a challenge on the Google sheet which is how we calculate the Trade Ideas.
- I think we will start to hear more people talk about the risk of stagflation in the US. I’ve been working on a longer piece regarding stagflation risks but with my little site issue it’s been pushed out to next week. My view is if government spending is cut it will be a hit to GDP, unemployment will go up both with government and private sector, demand might start to slow in a few places in the economy (Walmart guide lower might be a first sign), while inflation remains sticky and possibly moves higher. The Fed could be in a tough spot. Do they care less about inflation and cut rates to hold up the economy and employment? Are they forced to raise rates to control inflation? The fiscal side vs monetary side could be at odds from a political standpoint. Last summer, Powell was asked about stagflation, and I think it caught him off guard.
- Trump and Secretary of the Treasury Bessent have stated their desire for the US 10-year yield to drop. One way to do this would be if the equity markets fell. That might happen, but it might be hard as President Trump prides himself on stock market performance. He has said recently, however, that some pain in the stock market due to tariff implementation wouldn’t be that troubling.
- Many people are public market prognosticators that sound like a broken record. It doesn’t mean they are wrong, but each has their time for their own salvo and catalysts to play out. Mike Green, who I greatly respect, has been at the forefront of talking about the passive inflow bid for years. He’s laid out the risks, but I wonder where the breaking point is when the passive bid breaks. It might be sometime in 2025. Where would that money go? The levered money might go to heaven and some to Treasuries or foreign markets.
- Apple’s Tim Cook met with Trump and there is a story that Apple will produce iPhone’s in the US. I asked friends how much the labor cost would be in the US vs Asia and I was told 50% higher. Get ready for the $2000 iPhone.
- NYC is a tough place. First, it was the E-bike delivery guys killing people and now it’s a drone crashing into the Midtown Hilton. The good news is that the rat problem in NYC isn’t as bad as in Chicago.
- I’m speaking with my long time friend Grant Williams on Monday for his podcast. Grant is a terrific and smart guy who does excellent interviews with some interesting guests. Grant interviewed me back in 2016 for Real Vision and it started Hedge Fund Telemetry’s popularity. I’ve declined many interview requests and backed off doing Twitter spaces as I found them monotonous. I tend to lean bearish and skeptical with some of my views, so I’m thinking of this as a bear who is coming out of hibernation type of interview.
- I’ll leave it here for the week. I’ll have all the weekend notes out on Sunday, and hopefully, I’m not consumed like I was with the site issues and getting people logged on as I was in the last 10 days. As always, thank you for your support.
Quick Market Views
Stocks: Indexes are down about 1%. Breadth is weak while the Mag 7 is down 1.5%. The recent add with SPY and QQQ short exposure is working well. No significant levels have broken yet but might get ugly next week. It’s a huge options expiration today with a considerable gamma roll-off with $2.4 trillion expiring. Charlie from Nomura as I showed the other day mentioned markets could be more free to trade once this roll off occurs while there has been a lot of upside VIX call buying. It looks like markets are getting loose on the downside. Next week has some earnings reports we’ll be watching but it’s all about Nvidia on Wednesday and they will set the tone after the report for the market. I’ll have more to discuss next week. Today there isn’t a lot of safe havens in the market except for our China long exposure.
Bonds: Rates are lower with a risk off type of tone. Perhaps with equities down people are shifting to bonds?
Commodities: Mixed to mostly down action. Natural Gas is up 5%. Crude is down 2%. Grains and softs are lower. Cocoa is down 10% helping our DBA Ag ETF short. Copper is down 1%. Gold flat and Silver down 1%.
Currencies: US Dollar index is up 0.2%. Yen strength continues with USDJPY now at 149.25 breaking the TDST Setup Trend support. This is a macro risk I’ve been watching. Bitcoin reversed and is down 1.25% still holding support levels.
Trade Ideas Sheet: PNL up for the week and trying to hold 4%.
Changes: I will take profits on FXI +18%, and EWZ +13% (NU the largest weight, had a weak quarter).
A few days ago I recommended buying the March 21st expiration SPY 605-590 put spread for $2.50. Also March expiration QQQ 530-500 put spread for $4.00. As always these can and might go to zero as they are hedges so keep your size small. These are getting into the money and could be trimmed with gains next week with a little more downside.
Thoughts: I would love to press shorts harder but no significant levels have broken yet so having a large cash allocation is a reflection of my bearish view. I’d rather avoid some of the potential whips that we’ve seen so far this year.
US INDEXES
Here is a primer on the DeMark Setup and Sequential indicators.
S&P futures 60-minute tactical time frame had a Sequential 13 earlier and I dismissed it and now a new Combo 13 but this Combo is from the first Setup 9 on the 14 so there is still some risk lower. This signal could also bust.
S&P 500 Index daily had a new DeMark Combo 13 this week at the highs and price flip down. Still above the 50 day at ~6000. No major levels have broken yet.
S&P weekly with new Combo 13 this week. Watching trendline which if broken would likely see a much deeper correction.
Nasdaq 100 futures 60-minute tactical time frame with a new Combo and Sequential 13 however these signals might bust lower. There are times from my experience I will dismiss some signals.
Nasdaq 100 Index daily with a hard drop today but no major levels broken
IWM Russell under pressure after making a lower high
Trade Ideas Sheet
Pre changes
The new short term momentum indicator turned red the other day at the highs and is reversing down. I am short both SPY and QQQ the max 5% weight now.
FXI China/Hong Kong has new Combo 13’s several versions and Sequential 13 due on Monday. I’ll take gains today.
BABA is up huge and overbought. If you wanted to take gains, I won’t stop you but I’ll hold this one longer and deal with some give back to buy more on dips.
KWEB is on day 10 of 13 with the Sequential. I’ll hold this one.
Lagnificent 7
Michael Hartnett of BofA might have the new moniker for the Mag 7. I love it!
Hedge Fund Telemetry ETF Percentage Price Oscillator Monitor
The PPO monitor (percentage price oscillator) force ranks ETFs by percentage above/below the 50-day moving average. For information on this monitor, please refer to this primer. This monitor and others are offered to Hedge Fund Telemetry subscribers on Bloomberg. Ugly action ex China
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD. Some ugly action
Goldman Sachs Most Shorted baskets vs. S&P Indexes
This monitor has the S&P indexes and the Goldman Sachs most shorted baskets. Short baskets leading on the downside
DeMark Observations
Within the S&P 500, the DeMark Sequential and Combo Countdown 13s and 12/13s on daily and weekly periods. Green = buy Setups/Countdowns, Red = sell Setups/Countdowns. Price flips are helpful to see reversals up (green) and down (red) for idea generation. The extra letters at the end of the symbols are just a Bloomberg thing. Worth noting: Nothing really stands out.
Major ETFs among a 160+ ETF universe.
If you have any questions or comments, please email us. Data sources: Bloomberg, DeMark Analytics, Goldman Sachs, Street Account, Vital Knowledge, Daily Sentiment Index, and Erlanger Research