- I planned to take off today to go out to the Hamptons for a nice weekend, but Lee Ann nixed the plan because she has a book photo shoot at our house on Monday and said she needs to prep. (She has an interior design firm, if you didn’t know). I’ve tried recently to explain some of the craziness in the markets, but she’s gleefully uninterested. She tries to tell me about a sofa that is delayed by the vendor, which is upsetting the client, and I’m gleefully uninterested. It’s been a good balance over the years.
- Taking time off has been something I need to do but don’t because I feel like I have my foot on the gas at all times. Hopefully this August, when my youngest daughter comes home for a week, I will, but the new site will be launching, so we’ll see.
- The problem might be that I love the markets, even when I’m having a rough patch, because the challenge of rebounding drives me harder. So far in July, the overall PNL has improved significantly, especially with the recent put spread gains.
- I chat with a lot of fund managers and analysts/strategists. Nobody is surprised by the pullback in memory semiconductors; some are taking profits on shorts, while others are adding to long positions. Jonathan Krinsky from BTIG has posted today a calm, methodical technical note on the risks of some important levels on the ledge, while implied correlations are low, as I have shown recently as well. He mentioned the last time this particular pattern occurred was before the Summer of 2024 Yen carry trade unwind. I have a few charts below that have been breaking some important levels, and considering the heavy concentration and leverage that has been deployed while investors have overall been complacent, we’ll see.
- The Canadian wildfire smoke has eased considerably in the northeast, and that is a good thing for Sunday’s World Cup final.
- SpaceX scrubbed the latest Starship launch last night. The complexity of launching rockets is underappreciated by many, so being cautious is smart. It’s taken $90 billion off its market cap, but a rocket explosion would be a $100 million loss. SpaceX has broken both the opening price at 150 and the IPO price at 135. It has lost an amazing $1 trillion in market cap off the high.
- The US-Iran conflict continues with tit-for-tat action as the MOU and ceasefire seem like a distant memory. It has been mostly contained, but if this ramps up with the dangerous potential of US soldiers’ lives lost, the escalation will be out of control.
- I mentioned I was going to write a note comparing the buy-side trader to the sell-side trader. That will get posted next week.
- NYT is reporting Meta is going to lease compute power to Anthropic. It raises questions about their frontier models, yet it will bring in significant revenue. SpaceX has been doing the same, and it needs revenue more than Meta does in the short term.
- The story about the President’s teleprompter guy making $100k on prediction markets on what the President might say is nuts.
- TRUMP MEDIA PITCHED $100,000 MONTHLY FEE FOR FAST FEED OF PRESIDENT’S POSTS – FT – How much for getting tipped off a minute before each post like those in the administration get in advance? Asking for a friend.
- Who could have guessed it would be Taco Bell’s lettuce that would cause a severe diarrhea outbreak?
- Market sentiment has not broken levels yet that would ring a few bells. More on this Sunday on the Week Ahead.
- I’ve had very positive feedback on the Big Picture note and also have mentioned I will be bringing out a new “Action Note,” making it all about actionable ideas. The new site is rapidly coming together, and I expect everyone will be very pleased.
- Next week, earnings continue with more sector components reporting. Notable: GM, HAL, T, GEV, GOOGL, IBM, NOW, TSLA, TXN, CMCSA, BX, DOW, FCX, LMT, DECK, INTC, AXP, and VZ.
- There is M&A chatter with ADBE going around today. It’s from Betaville, which doesn’t have a record I would trust. ADBE needs a new CEO and CFO, which could be a better catalyst to watch in the near future.
- Crude is up 15% in the last 5 days. Crack spreads are elevated at $70. A crack spread is the profit margin a refinery earns by buying crude oil and turning it into products like gasoline, diesel, and jet fuel. My dedicated energy traders (I have several who are amazing) believe crude and energy products are undervalued. I am long XOM and CVX, both diversified and with refining businesses, and they are working out well.
- I bailed on NFLX long. I bought it in the low 70s, and when the Lions Gate and Universal rumors started recently, it gave me pause; I would have liked to exit on a bounce. Expect a lot tighter trading with shorter-term ideas.
- Market indexes are off their lows today. S&P breadth is weak with 157 up and 346 down. The Mag 7 is down 1.4%. Energy and metals are strong today. Semis are rebounding, as they are the go-to for the buy-the-dip crowd.
- Commodities are strong today with Crude up 4%, Natural Gas up 1.4%, Grains up moderately. Copper down 1% with Gold up 0.75% and Silver up 0.35%.
- As always, thank you for your continued support of Hedge Fund Telemetry. I’ve been grateful to the sticky long-term subscribers, many institutional subscribers, and lots of individual investors. I can’t wait to share the new site and new formats.
- With that, I will leave it here for the week. Enjoy the Open, World Cup, the Belgium F1 GP, and the Dodgers sweeping the Yankees. Oh come on, you know I love the Dodgers.
Current Portfolio Ideas:
Changes: I sold all of the recent put spread ideas, which worked out very well on average with 100%+ gains. They have worked well in a crazy environment where quantifying the risk of being wrong has been prudent. I am going to suggest a couple new put spreads expiring on August 21st. SPY 735-720 for $2.90, QQQ 675-650 for $4.85, and I wanted SMH, but the premium is too high. I will also add a long call idea for PCT, with an August 21st expiration, buying 7 calls for $0.50. (Company earnings/update on 8/7) As always, keep your size down as these are out of the money and can be zeros if wrong. If right, they will be nice gains even with smallish size.
US INDEXES
S&P index 60-minute tactical time frame nearing TDST support
S&P Index 240 minute has had two TDST Setup Trend levels to watch. Nothing has broken yet on upside or downside.
S&P 500 Index daily back to the converging 20 and 50 day
RSP S&P equal weight with a new Sequential sell Countdown 13.
Nasdaq Composite Index daily has near term support with June lows ~25k
Nasdaq 100 Index daily is below the important TDST Setup Trend support. Notably weaker vs S&P index action.
IWM Russell 2000 has moved sideways after strong performance. The top 10 largest attributes that took the index higher were removed recently with the rebalance. Watch the TDST support.
S&P heatmap
Current Portfolio
SMH was under the important TDST support and might close below. I remain short after taking some exposure down recently
PCT Pure Cycle had some very good news regarding a significant new customer in Japan in 2027. The stock is getting closer to both Sequential and Combo 13s. It’s a tough market for small-cap stocks that are currently losing money. I expect the stock to rebound with revenues increasing in the 2nd half. I added a call option and will keep the current long weight.
Tesla reports on Wednesday and still has support at 368. I’ll do a preview next week. SpaceX should have bought Tesla before they lost $1 trillion in market cap.
Earnings calls with Elon Musk are always full of wild promises that mostly never happen. How did this work out?
moonshot?
In the Big Picture for July posted on July 8th, I focused on China/HK tech companies invested in AI. Some people might not take the Chinese threat to US AI models seriously but Alibaba owns 35% of Moonshot AI among other large stakes in other AI companies.
From the Big Picture note: (if you want to add the Big Picture note – let us know and we will add if for you. Just let us know if you want the 1 year or 2 year option. (2 year saves $100 and more people have opted for this)
wave personalities
In our Bloomberg chatroom, I referred to a potential wave target, and Vinnie Daniel (of Big Short fame and has a great Substack with Porter Collins – I am a paid subscriber and it’s well worth it) asked about wave targets. The DeMark waves are computer-generated, and the method for DeMark DWave is different from the standard Elliott Wave price/wave methodology. I told Vinnie that the more important thing to understand about waves is knowing the personality that occurs within each one. These are the personalities typical within each wave when the wave pattern is going up. You can think in the opposite way when there is a downside wave pattern. Remember this when looking at our waves, and it will be very helpful.
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. Interesting how what is on top trading below today’s vwap and vice versa at the bottom.
Index ETF and select factor performance
ETF with today’s performance with 5-day, 1-month, and 1-year rolling performance YTD. Looks like someone might be “hitting Iran hard this weekend”
Goldman Sachs Most Shorted baskets vs. S&P Indexes
This monitor has the S&P indexes and the Goldman Sachs most shorted baskets. Take a look at the %5day column for short sector index vs the most shorted basket.
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 developing sell Countdown 13’s (many on day 12 of 13)
Major ETFs among a 160+ ETF universe. XHB home builders with Sequential sell Countdown 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