Equities Vulnerable Leads To GFBP Position Tracker Moves
Hedged Short Expansion in the GFBP
Ok, we have a lot to get into, first up for our paying subs we have the Magnelibra Global Futures Benchmark Program Position Tracker Update. We want to highlight the Tracker has moved into a more Bearish overall Equity position with the late Friday push. We noted in our late day letter there was going to be some position jockeying and we have the latest out for you. The GFBP ended the week -1.18% but since inception here on the newsletter still up 7.25% for the month. The notable changes are long Ultra, long SP, long R2k, long Crude and short the 30yr bond, the Nasdaq, the Nikkei, and British Pound. We loath a short Nasdaq, but the program metrics take priority over our fundamental discretionary, emotional preference, but we keep a constant eye. We would also like to note that the GFBP recommends a unit long call option hedge in the SP500 weekly option, most notably above or at the 3030 strike, to hedge directional risk and volatility on a snap back. Anyway here it is:
Before we get into our charts we want to note an awesome chart from the FXweekly guys at Nordea. The authors Andreas Steno Larsen and Joachim Bernhardsen do an excellent job and these guys get it, damn well done fellas! Loved their lead off quote,
“Would you rather have cheap, subsidized - illegally subsidized - goods dumped into the Wal-Mart and not have a job and not have your wages go up in 15 years, or would you like to pay a little bit more - not much - a little bit more, have a job, and have your wages going up?” Peter Navarro
-My take is many couldn't answer that with a clear mind and this chart they posted on liquidity adds credence to our bearish equity theme at this point as we always have said if they QE and add liquidity markets will rise, if they remove it they fall:
Furthermore, our own proprietary asset class models are showing a renewed negative outbreak for the equities sector:
Furthermore the DAX Index is being rejected as well:
With all the talk of anti-trust going around and now the virtue signaling crowd barking down Facebook’s back and boycotting advertising, we can’t help but think the pressure will be on the high flying Nasdaq and our box which we have highlighted all week long:
The GFBP has swapped the long Nasdaq for long SP500 and here is the futures 1 to 1 contract and you can see the massive 8x run in 2020, a little mean reversion anyone? Let’s just see what happens here:
When we look at the Nasdaq vs the Russell2k we can see how much the Nasdaq has outperformed even a 2x R2K a nice 6x outperformance:
The SP500 has outperformed the Russell2k as well and but it continues to be rejected from the prior trend channel, on a 1 to 1 basis its outperformed by 9x since the Feb. lows!
We pointed out the Dow and the 25k level and its technical and psychological importance:
Crude Oil is also on the cusp of breaking a 2 month trend line:
Gold continues to shine, but we must warn you, a decent down move in equities will see gold most likely get hit as liquidity needs will most certainly surface:
Finally 10yr yields are showing signs of breaking down again, we feel a trade below 58 basis points will usher in a new flush to lower yields:
Finally, wanted to share an absolute stunning photo, I will give credit when I find out I believe @barrybutler9 on twitter, its a stunner and for those that don’t know, Magnelibra studies the electric universe and Plasma Theory. We can only tell you that scenes like this will continue as we move into a new solar era, as cosmic rays increase and our atmosphere continues to increase its electrical activity. We also want you to research the waning magnetosphere and see what you think as our magnetic poles are shifting rapidly and we believe many are not taking this seriously, we know we are and we will always keep you informed. Anyway check this out:
We also follow @chamath on Twitter, he is the CEO of Social Capital and is an avid outspoken logical realist that we love, anyway he is involved with Virgin Galactic and here is a pic from this weekends test flight, just awesome and if anyone knows how to calculate distance we would love to know the answer to our question in the pic:
OK, we hope you continue to spread the word on our work here with your friends and colleagues, remember, knowledge is key and it is the absolute goal of Magnelibra’s Econemotions to put you always ahead of the pack. When your family, friends and neighbors ask, how you know all this stuff, we hope you point them in our direction. We hope you consider contributing to our work and joining as a monthly subscriber and for the professional traders and investors, join our Founding Subscription because the position tracker is a uniquely proprietary driven model designed as a global macro market analytic that we believe can help to advance your trading and investing game.
-Econemotions
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