5/15 WATERSHED FED
the fed fully capitulates, are we in trouble? how do you play this?
Forward
I tried something a little creative with audio tonight. It is not really the main post, most of my real thoughts on where the markets are heading are in your regular programming lower.
But it was fun, I hope you get a laugh out of it, I couldn’t stop laughing at what voice to text thought I said, and then Gandalf thought the text read originally.
I think we are in a very similar spot to late 2017 and I provide some special individual charts tonight to look at playing. SMCI, AMD, AAPL, GME all huge winners for the tribe today. I AM BACK AND HERE TO TORCH THE MARKETS.
You know my returns, I always go on strong tears. Well I am feeling it. A hot hand, and I am ready to wreck up the place, and drive the tribe much higher.
Let’s get after it tonight. I can tell these set ups are going to set you up for months to come.
Tonight, tonight.
I found myself thinking quite a bit this evening. The thing about Markets is that they are constantly evolving creatures. The markets that we knew of in 2008 are not the same markets that we knew of in 2000 that are also not the markets that we knew of in 1987.
We’ve been here before, in fact, if you’ve looked at my VIX model, you know that the VIX has been very faithful to its volatility suppression since last March. Additionally, we are in an election year, all current data points to markets heading higher.
As I was saying earlier, you need to evolve with what the market is. There were times when markets were driven strongly by fundamentals, but it is clearly no longer the case. Markets are driven primarily by liquidity.
It is a new age. It is a brave New World.
Sometimes I still get caught up, watching what appears to be markets heaviness. Wondering if stocks are about to drop back down, still doubtful of whether the measures that have been instituted by funds for volatility suppression will actually hold up this time. I think that is The trap. They feign bearish set ups knowing that those without the ability to read financial engineering completely missed that Dixie is dropping. Volatility is dropping. HYG is climbing.
It does make you wonder where stocks will end up.
Perhaps that is an easy answer, higher.
I think what I, and most people in the industry today are trying to grasp at is some semblance of an idea of when will valuations no longer make sense? Often times now, they don’t seem to make sense stocks go for much more than they used to. They seem to deliver less value. Yet, they are still able to generate revenue.
Maybe that’s just the game now. As long as you can generate revenue and not run out of cash your company deserves high valuations. That we don’t need to root back into their actual earnings.
By saying that, I start walking into a dangerous territory of: what is a bubble?
Soros says buy the bubble.
I say as long as the liquidity remains high, you buy. I think that might be deserving of a frame with the way that rhymes.
We are reaching new Heights that we’ve never seen before in the indexes, and new Low’s of suppression volatility that we have yet to witness.
Many try to say the markets make no sense. But in the tribe, we know all that matters is liquidity. I’ve taught this for over four years now. You may notice now as well on Twitter, liquidity is almost the only thing that gets talked about.
Well, liquidity and momentum.
Perhaps when you’ve had 600 years to think things through sometimes you learn something once in a while.
Markets right now are playing a very specific game. This is how it’s going
Markets open
Stocks climb, reaching Apex somewhere between 1030 and 1:30 PM
Then markets fall into the closing. You buy the close
As long as financial conditions continue to remain loose, and the liquid in the system remains high, markets should ascend higher.
I think a lot of people are looking at the volatility index and are going, It can’t go much lower
What if it goes sub 12? Similar to what we saw in July of last year.
It forced a sharp melt up in markets. What if again that is what we have right now?
I will say at this point I hate voice to text. It is so quick getting out words yet failed just utterly enough slightly enough that I will have to go back and reread this whole thing and see if it makes any sense.
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Regular Programming
I appreciate the tribe hanging in there as I tried a bit of creativity in adding Gandalf to my nightly writings.
Not everything is a winner, I think I will just stick to the wiz pods. (lol)
Today, was a truly momentous day for further upside. I think as Gandalf tried to explain, I see the potential for a break neck upside lift here, before we potentially tumult lower.
We saw DXY’s back get broken today, and VIX dropped to new lows. I don’t think we should doubt either given Powell’s sentiment.
We know how the game is being played, square it up as best you can for elections and then fuck all afterwards.
Keep playing long until we have any reason to doubt any of that.
Now instead of a complete rehash, I strongly recommend you quickly re-read this morning’s Wiz Charts where I went around the horn.
That said, here are a few charts, and what I am chewing on this evening: