by agilmore1080

This Santa rally is nothing greater than the ultimate cease for hedge funds and enormous monetary traders to dump their holdings earlier than shit actually begins breaking and everybody realizes 2023 is the place the actual collapse happens. It’s why there isn’t any observe by over the 4000 SPX stage and no conviction to maintain it going greater as soon as it will get there.

You understand how you want you may return to November 2021 as a result of the writing was clearly on the wall for a bear market in 2022? Effectively, that is the time to leap on earlier than the subsequent huge transfer down and I feel you’ve got at greatest till December fifteenth to get on.

Lets take a fast journey again in time and evaluation how this present rally began. It basically bottomed on 10/13 due to the unhealthy September CPI print however then instantly popped to the upside as a result of it hit the 50% retracement stage from the put up COVID excessive. There was completely nothing that occurred that day to warrant such an aggressive transfer up, all purely technical primarily based on algo shopping for. Did you occur to catch the interviews on CNBC and Fox Enterprise the place they interviewed merchants in regards to the loopy day and requested them to elucidate what occurred? All of them seemed into the digicam with glassy eyes in whole disbelief like they’d simply watched their favourite grandma get run over by a dump truck. They’d no solutions. Which is why it instantly gave up most of these beneficial properties the subsequent day. However that algo shopping for is what prevented a transfer a lot farther down.

Then comes 10/17 and 10/18 the place it strikes up once more primarily based on good monetary earnings from the key banks and bond markets stabilizing within the UK. After this the market begins giving up these beneficial properties however then we’ve the Wall Road Journal article on 10/21 with feedback from Fed president Daly that sparked the market up till 11/1 primarily based on the notion that ” We’re nearer to the tip than we’re to the start, and the extra bear market rallies we see, the less are left earlier than we lastly flush all of it out” – SoFi’s Head of Funding Technique Liz Younger.From 10/21:

  • In remarks at a gathering Friday, San Francisco Federal Reserve President Mary Daly stated the U.S. central financial institution ought to keep away from tipping the economic system into an “unforced downturn” and that it was time to contemplate easing the tempo of hikes.
  • Traders additionally assessed a Wall Road Journal report earlier within the day indicating Fed policymakers are poised to ship one other rate of interest enhance of 0.75% at their assembly Nov. 1-2 and however are anticipated to debate the potential for a smaller enhance in December.

This narrative is shortly put to relaxation by Powell on 11/2 and the market continues down for a short while however doesn’t escape of its uptrend although Powell said a smaller fee hike in December doesn’t imply they’re stepping again or pivoting from their continued battle with inflation. He continues to bolster the smaller -> greater -> longer narrative.

The market offers no fucks and after a brief interval of consolidation it blows it’s load on 11/10 after a CPI print that is available in barely higher than expectations. From this level it’s been consolidating and shifting between 395 and 403.

So what am I saying right here? I’m saying this present rally shouldn’t be taking place however the market refuses to simply accept the reality of the place the Fed and this economic system goes. Nonetheless, to cite a line from one in every of my favourite reveals final yr, “Each lie we inform incurs a debt to the reality. And eventually, that debt is paid.”

So now lets have a look at a few of the reality this market is ignoring.

The buyer financial savings fee is approaching a historic low whereas their debt ratio is shifting to an all time excessive.

The ten Yr – 3 Month treasury yield inversion has hit a stage not seen since earlier than the dot com bust.

The ten Yr – 2 Yr inversion has hit a stage not seen for the reason that 80s.

The VIX has hit the underside of its present trendline in addition to a serious oversold flag.

The SKEW Index that tracks the potential for a higher than 2 customary deviation drop is shifting straight up.

QT nonetheless taking place and the draining of this liquidity from the market is simply going to boost volatility.

Large Banks have bought off greater than $150 billion in mortgage backed securities since final October (at a loss) You may learn my earlier put up about this right here:

That is one other nice explainer of the upcoming drawback with mortgage backed securities:

And right here is a good exhibiting of how this rally has indifferent itself from actuality. The value of crude oil is not correlating with the worth of power shares. And this detachment simply began firstly of October this yr. Does anybody have a rational idea as to why power shares could be popping whereas crude oil drops? To me this can be a clear signal that a lot cash is being rushed into the market that all the things goes up no matter fundamentals.

My positions:

  • 10 – $400 SPY Places JAN 20 23
  • 20 – $15 SPXU Calls MAR 17 23
  • 2 – $2600 SPX Places JUN 30 23
  • 10 – $100 VIX Calls MAR 22 23
  • 10 – $245 QQQ Places MAR 31 23
  • 10 – $3300 SPX Places MAR 17 23
  • 10 – $30 VIX Calls JAN 18 23
  • 10 – $60 VIX Calls JUL 19 23



Disclaimer: This data is just for academic functions. Don’t make any funding choices primarily based on the data on this article. Do you personal due diligence or seek the advice of your monetary skilled earlier than making any funding determination.


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