Merlin’s Capital

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Merlin’s Capital
4/22 Are Markets in Serious Trouble?
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4/22 Are Markets in Serious Trouble?

Today's pop was not a good sign, 40% of earnings about to report, MSFT, TSLA

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Merlin Capital
Apr 22, 2024
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Merlin’s Capital
Merlin’s Capital
4/22 Are Markets in Serious Trouble?
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Good Evening, first off, I hope you enjoyed the special wiz pod on Friday. :) The big news for us was cheekily announced, the support of this substack will be going to 2500 diapers that will get torched in the first year. (us wiz’s are celebrated poopers)

Second off, there’s a lot to think about tonight, I was a bit slower in writing this because I needed to look over a few more charts to confirm that what I was thinking is correct.

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A new child is a kaleidoscope of joy. It's the awe of witnessing a tiny miracle, a perfect blend of you and your partner.

Every gurgle, coo, and gummy grin feels like a personal victory.

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Markets

Today we have the big question of what is the bounce today an actual trend change or simply a dead cat bounce.

Interestingly enough, if you look at the two hour on spy, you’ll see the market perfectly popped into short term momentum, and then subsequently sold off. What this initially indicates is that today was merely a relief bounce, and not an actual trend change within markets. However, markets are currently set on max difficulty with our indicators, relatively diverging. We have HYG heading higher, which would indicate initially that liquidity is re-entering the system. However, VIX remains elevated as well as the US dollar. This is something complicated that we have not seen over the last year. It might indicate because we use a very simple measure for HYG, although HYG. represents more than just liquidity. It is also private high yield corporate bonds what we could be seeing is simply a trend away from sovereign bonds as a further reaction to yield continuing to climb. HYG has recovered far more than TLT.

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