If Bitcoin goes, everything will.
As correlations with the S&P 500 elevate dramatically, Bitcoin will be the best indicator of risk-appetite.
Last week’s thoughts on cash:
With elevated valuations, unstable economic conditions, the backdrop is becoming much more hostile toward investors in the intermediate term, understanding the value of cash as a “hedge” against loss becomes more important. Yes, cash will lose purchasing power over time but when volatility spikes, equities can lose a lot more. And remember this, Wall Street does not make fees on investors holding cash…
In short:
The recent +6% massive swing in oil is helping bid financials and energy this morning.
Notice how the Dow is bid but the Nasdaq is still getting sold. BTC is the lead health index.
Everyone gets to party as long as they want but when BTC pukes, everyone must puke.
If you take a step back and see the S&P 500 chart, you will notice the channel that is still intact (see below). Cash is still a position.
Nvidia is starting to fill the gaps. Look to go long soon
“Stanley Druckenmiller took money out of the market two quarters in a row. He cashed out ~$1.42B & bought ~$582M of stocks as of 9/30. He pulled total ~$1.5B, ~33% of his fund value, out of the market since Q1. Druckenmiller apparently believes it is time to be conservative.” -HedgeMind
Ethereum displacing Bitcoin as king will break mental models.
Correlation between S&P 500 return and 10-Year U.S. Treasury yield. Something to note.
We’ve been covering this Nvidia top for a few weeks now and the gaps are starting to fill.
Goldman is out with its top 10 commodity trades for 2022. (Long all major commodities?)
Our Ten Commandments
Work harder than anyone else
Busy people always finds time
Timing is everything
Harder you work, luckier you get
Investment is a trade gone wrong
Be the dumbest person in the room
Manage the draw-downs and compound the returns
Trading only one asset class is blind
Build systems and take the human error out of trading
If you don’t combine asset allocation, trend & momentum following, macro and tail hedging strategies in your long-term portfolios then good luck to you.