- We made it to another Friday! The amount of news volatility with headline risk has been fairly extreme. It’s tiring. I’m longing for the good old days when we’d worry about tariffs and not war.
- Do you believe Trump or Iran? I don’t trust either for complete and accurate news. Trump has a long history of creating or inflating positive news, and Iran has a long history of basically always being hostile to the US.
- One of the many crazy stories about Donald Trump from the 80s centers on “John Baron,” his publicist. John Baron would call the NY newspapers, inflating Trump’s image, stating that Trump was worth far more than estimates suggested, that there was “huge demand” for his properties, and that he constantly turned down deals because demand was overwhelming. He even told People Magazine that Trump was dating multiple supermodels. As it turned out, John Baron was actually Donald Trump, lightly disguising his voice. Reporters seemingly didn’t care as Donald Trump’s hype sold newspapers! Eventually, one did record his voice, and Trump unsurprisingly denied it. Nobody ever met John Baron. It’s always good to take some of President Trump’s comments with a grain of salt, as there is a pattern.
- I’ve mentioned how the markets are in a dangerous position. When both stocks and bonds are selling off with DeMark Countdowns in progress with both markets, yep, it’s dangerous. Especially with the Countdowns not close to 13’s.
- Yesterday was a fairly ugly day, and overall volume was the second-lowest of the year. For those hoping for some signs of capitulation, low volume is the furthest from capitulation.
- Internals are reaching levels I like to see at bottoms; however, there aren’t enough oversold signals lined up for the “Lonely Bull.” I posted this on X last April and got the usual skeptics’ “good luck, bro.” Internals update on Sunday’s Week Ahead note.
- Recycled news yesterday on Alphabet’s own AI chips not requiring huge amounts of memory hit memory stocks. Nearly the same old news is hitting some cybersecurity and other software stocks today, driven by news about Anthropic. This news was out in February.
- Volatility creates opportunity. A lot of potential long ideas are getting there. Shorts are working (most of them are moving lower), and the overall PNL is doing fine. As a long-short manager, I don’t expect longs to move higher when the overall trend is weak. I believe in the companies, and on most of them, there are positive catalysts that could come at any time. PCT, for example, is in better shape than it was a year ago. It’s down hard with the delay in New Jersey approving PCT’s process for recycling plastic. The company is doing a lot to educate the state, and NJ is home to many companies that want to use PCT’s plastic. It’s partly why they missed revenues, and I see it not as “if” but “when.” You just have to be there and keep your size within your sleep at night level. When approved, it will also serve as a model for the rest of the states and see a revenue spike, crushing another short thesis.
- I am home alone this weekend as Lee Ann is traveling. She was in the TSA line for 3 hours and remarkably remained calm. It’s a free pass for me to work a little more without the guilt, as well as watch sports. Baseball is back, the Japanese F1 races (although I will be watching on delay), and March Madness continues. On Saturdays, I tend to get offline and outside, which I recommend. Downtime is underappreciated.
- I will have an interim update for the Big Picture note on Sunday. Interim notes are shorter and more focused. Next week I will have the larger April note. I am grateful to everyone who signed up. It supports my work and the company. The number of those signing up was gratifying. It’s priced right, and perhaps a bit low. People have overwhelmingly chosen the two-year plan, further confirming that it is very worthwhile. Here’s the pitch:
- Designed for investors who think like portfolio managers, not day traders. Best suited for:
- Hedge funds, Professional traders, Asset allocators, Family offices, and Serious individual investors
- $250 / year or $400 for a two-year discount option Use this link to sign up now.
- This is the introductory pricing for the first 1000 subscribers. I have also been told I have underpriced this, so I can and will raise prices in the future. If you sign up for the introductory price offer, it will renew at this price for life.
- The focus will shift between equities, macro, rates, commodities, and currencies depending on where the most important opportunities and risks exist. Here’s the March Big Picture. We had a glitch with Stripe, our card processor, which caused a few of you to be charged twice. Those charges were reversed.
- I’ll leave it here and wish you a great weekend. It’s a hairy market, not easy, but we’ll get through it in better shape than most people, as I look forward to shifting to a net long position at the correct time again.
Current Portfolio Ideas: PNL up 8.89% vs S&P down 6.93% YTD.
Changes: I will trim a few shorts: I will reduce AVGO from 5% to 2% with a 3% gain. I will reduce NVDA from 3% to 2% with a 6.7% gain. I will reduce FEZ from 3% to 2% with a 2% gain; I will reduce XLY from 2% to 1%; and ARKK will be reduced from 3% to 2% with a 5% gain.
Thoughts: I recently reduced more than half of the software long exposure with gains, and have small positions that have turned red. I’ll be back to buy them again soon. There’s going to be a lot to choose from when this market bottoms, and my advice is to always upgrade your portfolio, starting with top-quality holdings when you get the chance.
US INDEXES
S&P futures 60-minute tactical time frame has been making lower highs and lower lows. New Sequential and Combo 13’s yet another 9 so there could still be another Sequential starting with the downside wave 3 potential price objective of 6308
I don’t think Trump has DeMark indicators but the last two TACO’s had 13’s with short lived bounces. New downside Sequential Countdown in progress with the 240 minute chart.
S&P 500 Index daily with downside DeMark Sequential on day 7 of 13 and Combo on day 9 of 13.
Nasdaq 100 Index daily achieved the downside Propulsion target with Sequential only on day 3 of 13.
Dow Jones with Sequential on day 6 of 13 and Combo on day 9 of 13.
IWM Russell 2000 also with a Sequential in progress on day 5 of 13
Current Portfolio
Pre changes
AVGO has been a tough short but it’s in the money after adding to max 5% weight on the last bounce. 300 has been support and I’ll take a little off with a small gain to lock in.
NVDA daily peaked in October with all of the hoopla over it being worth $5 billion. In downside wave 3 with a potential price objective of 148. I’ll take a little off with a gain, as this will be a go-to for many on any bounce attempt.
NVDA weekly looking over the cliff or at support. I’ll take a little gain as I recently added short higher
XLY Consumer Discretionary with both Sequential and Combo 13’s. I’ll take some gains and keep a small marker size 1%. I am short TSLA and it’s 20% of the sector weight.
S&P heat map
Defensive sectors leading
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. This monitor and others are offered to Hedge Fund Telemetry subscribers on Bloomberg. What has been working is working with them above the 50 day. Gold and Silver were very oversold by % below 50 day so there is some mean reversion. The majority are hitting 20 day lows (in red on the 2nd column from right) Most are below the 10, 20, and 50 day as well.
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD. Metals bouncing back after the last month’s big downside move. I recently covered GLD short.
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 are leading on the downside while the sector indexes are also mostly lower ex energy, consumer staples, and utilities
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: Seeing a few more buy signals, but not nearly enough for a bottom.
Major ETFs among a 160+ ETF universe. XLY Combo 13
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