Indexes Continue to Rebalance
GFBP Positions Tracker Makes a Change
Magnelibra Econemotions has given plenty of warning as to the readjustment that was looming in the index butterflies. We can’t say our timing is always great but rest assure Tech was on a roll, a never ending one and we know investors propensity to go all in with the herd. With that said, we aren’t surprised at the recent turn. We still believe the Nasdaq vs the other indices will exhibit times of great outperformance, yet in reality the tech outperformance trend seems to have changed and we feel that its just beginning. However when we look at our 2xRussel2k/Nasdaq spread things rarely move in a straight line:
Hey the Russell isn’t cheap either, don’t get us wrong, fundamentally we feel they are both well out line of reality, well other than the MV =PQ monetarist printers reality, but Crescat posted this chart of the Russell3k P/E Ratio:
All of this combined with massive moves out of the German Dax, which is up some 17+% over the last week or so and we are kinda getting the feeling of too far too fast:
Meanwhile US Govt yields have risen substantially into the refunding and are pushing the limits of the massive 10Y options strangle that has been in place bracketing the yields between 0.65% and 1.00% respectively. We had a good conversation explaining this trade to a Wall Street Journal columnist the other day and we are always glad to give our expert opinion on such matters. We take a holistic approach to explaining trades and are always quick to point out, that we never know one’s complete book and thus can never truly tell if its an outright position or a hedge to a larger position. However maybe you will see Magnelibra quoted in the WSJ one of these days, that would be a great little accolade.
As yields have risen sharply pushing the long end out to 1.75% we can’t help but notice the Ultra Bond futures have quietly been in a month long down trend and we are at the bottom of the range here.
Let’s look at Silver now which saw fast and furious selling at the $26 level but it has quickly regained footing:
As far as the settlements for today Nasdaq was once again the big loser:
Finally Magnelibra Econemotions Newsletter Global Futures Benchmark Program Positions Tracker did make a few MOC changes today and we will keep a very tight leash here on things as we transpire thru the election process:
We do pride ourselves in our analytics and the work we have done developing this program, as always our goal is to present the tracker as our sentiment for the markets we cover and shed some light on how we actually navigate things from the long/short/neutral perspective. We feel our cross asset sector correlation model is superior to a general CTA trend model and thus offers us the type of dynamic flexibility required in today’s algo driven market.
As always, please share our work and subscribe if you haven’t already, your continued support allows us to bring you relevant and important market analysis and content. We are underpriced with the free tier, way underpriced with a 2 latte a month style and about just right for the Founders which has access to our Global Futures Benchmark Program positions tracker daily. We hope you enjoy our work and we hope you continue to support us.
-Magnelibra Econemotions
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