Important Interim Market Update April 11, 2023

[SOL]

With puppet masters pulling the strings of chaos to their benefit there are many known events primed to blow but maybe, just maybe, it'll be something inconsequential:

There are certainly some significant events unfolding, and if we weren't on the cusp of a MOAB signal, we might suggest waiting for the markets to let out some steam before taking action. However, taking such an approach in the past, such as during the Trump win and COVID crash, would have caused us to miss out on the bulk of the move.

Despite the MOAB signal, we won't be going all-in. Instead, we'll take a measured approach and deploy only half of our funds in separate intervals for new plays.

It's worth noting that the BRICS countries are becoming more aggressive in their plans to divest from the dollar. Southeast Asia has formed a massive number of bilateral deals allowing individuals from one country to use their local currency in another. The latest deal is the one with India and Malaysia.

The urgency surrounding these developments has increased significantly, particularly as the US has confiscated funds and gold from a number of nations. Exacerbating the situation is the fact that the dollar is also likely to put in a multi-year top, and China is considering stopping all rare material shipments to the US in retaliation for the semiconductor sanctions. As they produce the bulk of these metals, Europe and the US could be in trouble without them.

The current market conditions indicate that the gold and precious metals sector is gaining momentum for a potentially strong and prolonged rally that could last until 2025, with some expected corrections along the way. Additionally, the charts suggest that Bitcoin will also experience upward momentum, possibly reaching 45K and even 60K, but it will be a highly volatile journey.

Meanwhile, in the background, AI is getting smarter. It's a backdrop of events that certainly indicates the world is getting crazier the more technologically advanced we become.

[Expert]

So are the developments discussed on the Mar 21 update still in play and even stronger than before? Specifically, I'm referring to the FOAB signal and the other extremely rare signal that is even more significant than the FOAB?

Also, it has been mentioned in previous updates that there will be rangebound action foe 18-36 months and mass psychology and technical analysis are exceptionally useful in such situations. Is this still the case? Will there still be rangebound action for a couple years or so?

[Yodean]

*****

Statistically at least, there's generally some sort of pullback in late April or May, most pronounced in NDX. Some of the other more esoteric cycles I occasionally keep an eye on are also predicting some type of major geopolitical event in early May (could be slightly before or after) - hard to say what this means for the equity markets but if I had to guess, it would be quite negative, at least for a short time period.

Minor flash crash around early May? Not impossible ...

*****



*****

Although analogues should always been taken with a grain (pound) of NaCl and are bound to fail at some point, the 1966/67 vs. 2022/23 analogue for SPX has been remarkably accurate, to date:

1966/2022: yield curve inversion, bear market without recession being officially declared, high inflation, Fed rate hikes, Vietnam/Ukraine Wars, midterm POTUS cycle elections; markets mount significant rallies after midterm election, off October lows;

1967 = 2023? thus far, holding up pretty well ...

*****

Overall, accounting for expected volatility, my base case is for equity markets to trend higher until near the end of April, at which point I will reassess more closely.

There will likely be plenty of upside surprises secondary to earnings reports being much better than expected for the next few weeks, I am guessing.

[MarkD]

Interesting comment from someone I have quoted before:

"In our industry (), ocean and air volumes severely tanked about 6 months ago. Lots of folks attributed it to inventory imbalances. But now, our warehouse volumes are way down.

Inventories are not low. We have customers asking for space just to store finished goods. That is the problem. Lots of capital tied up in inventory and depressed levels of consumption.

It feels like we are entering a recession without breaking inflation's back. Not a great combo."

So warehouse inventory is shrinking but my question would be how low do the Fiscal and Monetary regimes allow this correction to go? Many economic indicators have declined, e.g. the PPI, but they are still above LT averages. Does the FED ever determine the Put is over? Are they influenced by the Fiscal disaster of the gubmint lackeys?

[Yodean]

Interesting comment from someone I have quoted before:

"In our industry (), ocean and air volumes severely tanked about 6 months ago. Lots of folks attributed it to inventory imbalances. But now, our warehouse volumes are way down.

Inventories are not low. We have customers asking for space just to store finished goods. That is the problem. Lots of capital tied up in inventory and depressed levels of consumption.

It feels like we are entering a recession without breaking inflation's back. Not a great combo."

So warehouse inventory is shrinking but my question would be how low do the Fiscal and Monetary regimes allow this correction to go? Many economic indicators have declined, e.g. the PPI, but they are still above LT averages. Does the FED ever determine the Put is over? Are they influenced by the Fiscal disaster of the gubmint lackeys?

I try not to let fundamentals poison my thinking too much.

My base case is there will be no official recession this year. All bets are off for next year.

We're coming out of a "gdp recession" in the first half of 2022 ... markets bottom months after recession is over (e.g. markets most likely bottomed in October '22, when Jesus told me to cannonball long) ... and earnings bottom months after markets bottom (e.g. current phase).

[MarkD]

Layoffs in tech already, with cyclical likely to increase imo. Only late cycle presumably is safe (utes, staples, heakthcare).

That would drive consumption lower with inventories high already.

I do agree a technical bottom hit in October but it isn't necessarily the end of the cycle. More downside coming methinks..

[Yodean]

*****

Empire State manufacturing PMI for March. Mostly bullish, for those who like "funnymentals" (fundamentals).

[MarkD]

Intermediate term indicators I follow are exhibiting weakness, in line with Sol's forecast of a near term top forming.

Longer term still bullish.

[Yodean]

[harryg]

Nearly everyone: "Coulda Woulda Shoulda"

A small minority: "Well do it now then"



Nearly everyone: "No, better not risk it"




Rinse & repeat

[SOL]

Look at those hedge funds – you think they can wait? They don’t know how to wait! I have sat for years at a time with $10 to $12 million in treasuries or municipals, just waiting, waiting…As Jesse Livermore said, ‘The big money is not in the buying and selling…but in the waiting.’
– Charlie Munger

Based on Munger's experience and others like him, one could conclude that waiting for the right opportunity is sometimes better than chasing after every opportunity that presents itself. The phrase "waiting for the mountain to come to Mohammed" is a subtle reminder that sometimes the best opportunities will present themselves naturally.

[SOL]

The current MOAB index is at 99, which is rather unusual, given its previous behaviour, where it would surge to 100% once it crossed the 93 mark. The recent uptick from 97 to 99 is highly peculiar. Based on historical trends and experience, we speculate that something significant must happen before it reaches the 100 per cent threshold. As previously suggested, one plausible reaction could be a release of built-up pressure in the market—ideally, a sharp pullback into May-June 2023.

In other market developments, the one-year bullish sentiment average stands at an unbelievable 38. It has remained below its historical average of 39 for almost 17 months, which is highly uncommon. It would be an understatement to say that this situation is peculiar.

Some may argue that we should call it a full-blown signal at 99. However, we must maintain discipline and follow established protocols. If we change the rules now, what stops us from further adjustments in the future? One point deviation today could be ten points in five years.

We must stand firm and wait for the index to reach the 100% range, even though it will eventually get there. It is unwise to force it prematurely. Who knows, the unthinkable could occur, and we could witness a FOAB and MOAB situation. As of now, the primary requirement for a FOAB (Father of All Buys) has been met.

[Expert]

The current MOAB index is at 99, which is rather unusual, given its previous behaviour, where it would surge to 100% once it crossed the 93 mark. The recent uptick from 97 to 99 is highly peculiar. Based on historical trends and experience, we speculate that something significant must happen before it reaches the 100 per cent threshold. As previously suggested, one plausible reaction could be a release of built-up pressure in the market—ideally, a sharp pullback into May-June 2023.

In other market developments, the one-year bullish sentiment average stands at an unbelievable 38. It has remained below its historical average of 39 for almost 17 months, which is highly uncommon. It would be an understatement to say that this situation is peculiar.

Some may argue that we should call it a full-blown signal at 99. However, we must maintain discipline and follow established protocols. If we change the rules now, what stops us from further adjustments in the future? One point deviation today could be ten points in five years.

We must stand firm and wait for the index to reach the 100% range, even though it will eventually get there. It is unwise to force it prematurely. Who knows, the unthinkable could occur, and we could witness a FOAB and MOAB situation. As of now, the primary requirement for a FOAB (Father of All Buys) has been met.

Also, it has been mentioned in previous updates that there will be rangebound action foe 18-36 months and mass psychology and technical analysis are exceptionally useful in such situations. Is this still the case? Will there still be rangebound action for a couple years or so?

[SOL]

Also, it has been mentioned in previous updates that there will be rangebound action foe 18-36 months and mass psychology and technical analysis are exceptionally useful in such situations. Is this still the case? Will there still be rangebound action for a couple years or so?

We anticipate the market will continue to remain rangebound for the near future. However, if there are any significant changes, we will inform everyone promptly and in an organized manner. Our aim is to provide ample time for everyone to make informed decisions, without feeling rushed or pressured. As Tactical Investors, we believe in walking towards the exit, not fleeing in haste.

[SOL]

Day Traders Lose $358,000 Per Day Gambling on Zero-Day Options


Rushing to join the trading frenzy in options with ultra-short lifespans, known as 0DTE for zero-days to expiration, small-time investors find themselves struggling to make it work. A fresh study from researchers at the University of Muenster in Germany shows the crowd may have lost $358,000 a day since May 2022, when it became possible to trade expiring contracts every day.

The record is alarming, but probably not a huge surprise. By one estimate, amateur investors took a billion-dollar bath dabbling in stock options during the pandemic boom. The new game of 0DTE is more challenging in many ways, among them the tight timeframe in which wagers need to work out.

The paper, titled Retail Traders Love 0DTE Options... But Should They?, is a reminder to investors and regulators alike that the latest investment innovations may not always be suitable for everyone.

“We are seeing the study as a cautionary tale,” Heiner Beckmeyer, who co-authored the study along with Nicole Branger and Leander Gayda, said in an interview. “These 0DTE options have huge leverage. They’re a one-or-zero bet, so you have the opportunity to make a lot of money, but you also have the opportunity to lose a lot. And that’s what we find in the paper that on average, it seems to be to the detriment of these retail investors.”
https://finance.yahoo.com/news/day-trad ... 03874.html


This story is a clear indication that many investors today are focusing on the high-risk, high-reward concept, but in reality, most will end up with nothing. As in from Hero to Zero.

A common misconception among traders is that they need to be trading all the time. But in reality, there are times to buy, sell, and sit back and wait. Sometimes doing nothing is better than doing something just for the sake of it.


Location is a critical factor in real estate, but when it comes to investing, success boils down to two key principles: patience and discipline. Regardless of how skilled you are in trading, technical analysis, or Mass psychology, without these two traits, you're likely to experience losses sooner rather than later.

The importance of patience and discipline in investing cannot be overstated. Impulsive decision-making,, and chasing high-risk investments leads to significant losses over the long term.

Investing Wisdom: Lessons from Top Investors

• You need Patience, discipline, and agility to take losses and adversity without going crazy. - Charlie Munger
  Patience can produce uncommon profits. - Philip L Carret
  Patience is a superpower. - Jake Rosser
  Be fearful when others are greedy and greedy when others are fearful. - Warren Buffett
  Like Warren, I had a considerable passion to get rich, not because I wanted Ferrari's -I wanted the independence. I desperately wanted it. - Charlie Munger
  Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas. - Paul Samuelson
  The stock market is filled with individuals who know the price of everything but the value of nothing. - Philip Fisher

For those seeking to enhance their skills in technical analysis, these two articles on StockTA could prove helpful.

https://tacticalinvestor.com/multi-time ... ming-tool/
https://tacticalinvestor.com/spy-200-dm ... nificance/