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‘Interesting’ Days!
It's all about tariffs this week. That goes without saying.
A benign scenario finds the Trump admin
H thank you for being a credible voice as always.
Perhaps when all is said and done, we’ll look back and think the country needed this chaos to snap out of its foolish delusion with Trump. I just fear the damage will be too great and it will take too long to tend to the wounds.
As of now, bitcoin dipped below $79k which is interesting because bitcoin did not follow the market down on Thursday and Friday. Maybe Saylor was scrounging every last coin from his couch cushions to prop bitcoin up while markets got massacred, but it was surprising to see bitcoin break its correlation with risk assets during a major market drop. Things can always flip quickly with bitcoin, but if that dip holds, it doesn’t portend well for the markets tomorrow.
I will say that it’s somewhat tempting to make an aggressive move in expectation of a relief rally, but as the saying goes, Trump makes fools of us all or is it don’t get fooled again?
I’m surprised how much commentary is focused on whether a buyable bottom in stocks will come on Monday morning or later in the day. There is a lot of “wiseguy” BTFG sentiment along with the usual FOMO pressures. Many, many trading models are indicating something like that.
I also noted stories on Friday about a wave of margin calls forcing selling by levered funds. That was further confirmed by the fact that gold, which had hung in really nicely, finally saw some heavy selling on Friday which hints of selling by funds which need to raise cash to meet stock margin calls. (You often have to sell positions which have done well when your other positions are plunging.) So it’s not out of the question that we’ve seen some capitulation selling in the markets, which would be supportive of a tradeable bounce.
That said, can we really put in a sustainable bottom before the Redditiers finally throw in the towel? JP Morgan estimated that those speculators bought $4.7 billion in stocks on Thursday, the highest level over the past decade. “The historic “buy-to-dip” move by retail investors included names such as Nvidia, Amazon and S&P exchange-traded funds, but they sold Tesla.”
I’m not inclined to
I’m interested to see how long Trump can refrain from saying something inflammatory on TruthSocial.
It seems to me that Trumps negotiating from a position of strength has failed. The S&P futures are already down 200 points (4%). Now other governments know he’s under incredible pressure.
Holding onto my qqq short
Trump playing golf over the weekend reminds me of when Nero was playing his fiddle.
“the demonstrable deterioration in sentiment prior to the “reciprocal” tariff unveil left positioning decidedly “cleaner,” where that just means de-risked.”
Spot on H. The initial move down from 6150 to 5400 was the pros deleveraging. They also delevered from bitcoin during this time. The only material contingent left with significant leverage are the MAGA (Reddit meme stock crypto) bros who are selling their bitcoin today to cover their short calls. Bitcoin will get hammered this week, might see the 60k’s. Also shout out to derek above pointing out the forced selling/deleveraging which circles back to the MAGA bros as they play heavy in the leveraged ETFs.
I’ve done well this year anticipating where the MAGA bros are going and taking the opposite side.
I think the knee jerk down is mostly deleveraging and thus why I expect (relative) stabilization between 5200-4800. We’ll see. Interesting that VIX of VIX was relatively muted. That and USD stabilizing on Friday lead me to that conclusion.