Real Alpha
Equity markets are one giant PvP battle. We like China.
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Summary:
Remember, most “investors” are sheep and regurgitate the news like birds. Investors are extremely bearish and pricing in the worst without even thinking for themselves. It is good to lean against the fear and use this as an opportunity.
Inflation has peaked: mortgage applications are down, too many new cars on the lots, store inventories are sky high (retail sales coming soon) and the millennial margin call happened last week (TRIN above 3).
With lighter exposures to equities, fund managers are more concerned about missing a move to the upside as opposed to more forced selling now.
It is important to note China’s central bank made an unexpected rate cut last week (bullish KWEB). Story Here
This week we like: China (KWEB), Sugar (CANE), Advanced Micro Devices (AMD).
VIX vs Gold/Oil is pointing to a lower VIX or a rip your face rally in gold. We bet a lower VIX for this mean reversion setup.
There is a greater chance the fed becomes incrementally more dovish than hawkish in 6-9 months. (Bullish) The fed already denied a 75bps hike a month ago.
S&P 500: Back to 4000 we go.
S&P 500: The % of stocks above their 50ma is still flashing for a bottom.
China (KWEB): Right here, right now. Stop loss at $23.25
The TRIN reading above 3 last week meant there was forced selling or someone was liquidated. More here.
AMD: Important levels are $83 and $100. A close above or below will tell the trend.
CANE: Sugar continues to outperform. Potential trade.
VIX & Gold/Oil: Mean-reversion trade (lower VIX)
Get ready for sales at your favorite merchandise retailer. (Slowing demand)
Return always wants its risk payment. NOT Investment Advice.