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Overlooked Treasury Data . . . . Again Nothing Is For Free . . . . ‘Melt Up’ Playing With Hands Tied Behind Its Back
Wild week that may end up proving extremely productive either way it ultimately shakes out on Higher Time Frames.
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If you recall, and outlined in this Bessent Flex article, the Treasury Secretary though performing his duties did issue a gut punch to Bitcoin in late July. Bessent said that there was no insight or timing as to any increases in the amount of debt sold AND that he would be buying longer duration debt himself on top of it.
Bitcoin received this like a punch to the gut even though 99.9% of market participants refused to believe it apparently. Now let’s look at the before and after:
Before: mehhhh, we’re good, no need to sell any more than what we are showing you, and by the way we are also buying some ourselves
After: ummmm, there may be a point where we will increase these auction sizes
Big difference. Bessent opened the door formally to the Treasury needing to sell more not less debt. We all understand the debt problem didn’t just go away because Bessent has been holding that flex for months. As stated at the time, I always felt Bessent was tapping the brakes on the unraveling of America’s fiscal position and health for multiple reasons most of which go beyond the markets (if you pay 30% of revenues to service your own debt YOU ARE WEAK period end of story).
In terms of market impact right here and right now . . . . . to me this is akin to jawboning the end of QT in that it makes a hypothetical bullish action appear more likely but not yet in motion or set in stone.
Here’s a Short I put out on some of the things I am thinking more about vis a vis balance sheet expansion:
Regarding AI Capex and the ‘Melt Up’ perhaps spreading even further and deeper into other Industry Groups, here is a report from Investors Business Daily showing the #2 ranked stock inside the 3rd ranked group overall Telecom - Fibre Optics:
The above is very bullish no way around it. LITE is booming right now. The stock isn’t big enough or influential enough to “carry the market” like NVDA but this is an excellent example of what I have been discussing. The ‘Melt Up’ is truly pulling forward certain sectors and groups and there are opportunities. My tune would be completely different if nothing was actually growing explosively and the market was merely full of overhyped junk with no actual results. Those stocks exist but there are also great businesses out there.
However - there are serious questions about how this will all get paid for:
Bitcoin Monthly
Bitcoin Weekly
Bitcoin Daily
As Glassnode aptly points out, the market is not exactly desperate right now from the long side or HODLer point of view if you will . . . . . as we’ve seen much higher unrealized losses in fiat pile up before:
According to Glassnode . . . . longs just simply aren’t paying up anymore to be long:
Liquidation Heat Map - Two Week Time Frame
Bitcoin Bottom Line:
Let the market tell/show us what is next
Very significant Volume Point of Control still sitting there waiting $96Kish ($95-98Kish)
Gotta hold basically $100Kish and then get above $103Kish and claw back to $108Kish to $109.6Kish . . . . . . and how many shorts will be waiting for that and how many will start buying puts at that point?
But there’s more confluence even lower $91.3Kish to $94Kish this zone is very important
$111-$113Kish resistance
$115Kish, $116.3Kish
Conversely absolutely there are bullish outcomes in the short term and intermediate term . . . . . sorry to be redundant but in my humble view it will very likely come down to the MONEY FLOW . . . . and what needs to happen is to essentially flip the script and turn these levels into support and have Money Flow on Lower Time Frames build and eventually turn Green on Higher Time Frames . . . . .
It needs to do a lot of bullish work . . . . just to get to a point where it then has to fight a LOT more to flip the current tempo and environment
A Treasury Co coughing up some coin is BULLISH in my view . . . . . justice served market wins . . . . . take the medicine and deal with it . . . . .
Bessent did toss a bone to Bitcoin this week no doubt . . . .
Risk On/Off
From Investors Business Daily on Friday:
IBD Industry Group Rankings
QQQ Weekly
QQQ Daily
HYG Weekly
HYG Daily
NVDA Weekly
FLEX Weekly
Emerging player in Electrical - Contract Manufacturing Industry Group. Like CLS, transforming itself due to vigorous demand from the ‘Melt Up’ seeing revenue accelerate, margins expand, transforming business.
AGX Weekly
AI proxy.
EME Weekly
AI proxy.
DVLT Weekly
Tiny little company nobody cares about. What is worth more A) haggling with a bunch of lawsuits to collect on a short on tiny stock with liquidity limitations, or B) using a “Research Report” to spread a shorting message so you can buy in a lot lower? Hmmmmmm.
LEU Weekly
Lower Enriched Uranium - keystone player.
VIAV Weekly
‘Melt Up’ and AI Capex kicking this one into top gear, Part of Telecom - Fibre Optics Industry Group.
AMPX Weekly
Batteries for drones. Numbers were excellent in my view. Business is booming.
EOSE Weekly
Zinc based off grid power storage solutions and software. The numbers were excellent. Demand far exceeds current production capacity and the backlog grows. That sounds bullish to me. I’m holding.
NB Weekly
Two most valuable Rare Earths and Niobium.
Risk On/Off Bottom Line:
If I’m looking at ‘Melt Up’ plays and who and what bounces first when QQQ/ES bounces and which groups almost immediately drop . . . . . overall I kind of like what I see . . . .
Market is telling me it knows there are questions and issues about from whom and from where all the “new money” will come to finance this mission critical energy/power/AI buildout . . . . . . . . but in my view the market is not yet telling me we can’t resolve it or it’s a deal breaker . . . . not yet at this time
Government economic data not available including jobs data so we don’t have data . . . . . . . . . but one can infer from other pieces or look to a Goldman or other firm . . . . . blah blah blah . . . . regardless my senses are simply getting stronger that the labor market is flat out bleak . . . . . which is dovish . . . . . and here we have multiple Fed talking heads jawboning a more hawkish tone . . . . but it’s not political (wink)
Risk On spent a lot of time floating above 21/50 and now it’s spending time slugging it out between 21/50 essentially . . . . . for now in my view this is relatively healthy
AI and jobs (what I found poignant was the CFO and C-Level positive growth on AI deployment) . . . . . if AI is augmenting operations for a mature, bloated, larger firm needing to cut costs to drive earnings among other things . . . . . and if I thought AI would further augment the business . . . . then why am I in a rush to add any headcount . . .
Inexplicably somehow Mr. Grey comes up with Metamorphosis . . . . . . . September “VOL will explode and Risk On will puke seasonals” . . . . . . then the “end of year rally” was a lock . . . . . maybe but not without the market making all participants pay a price . . . . . the ‘Melt Up’ may have its own Metamorphosis up its sleeve . . . .
Couple weeks ago “wow everything just looks so extended I can’t buy that now” . . . . . now in some ways it’s the inverse . . . .
Junk debt and Leading Stocks both behaved quite bullishly Friday afternoon . . . . . NVDA is a lot to lug around . . . . . .
Let’s say you voluntarily enter a competition to be in a cage with a big monster . . . . . . if you are disciplined, patient, and structured there are potential lucrative rewards . . . . . ultimately at the right time there is a bonus round for some extra rewards if you knock down the monster for a period of time or kill it . . . . . but the monster has gone the last couple rounds without being allowed to hydrate before and after rounds . . . . . . would you be excited to face the monster in the round after it gets access to a few bottles of nice cold water . . . . . is this the time to take a huge risk and try and throw your biggest punches . . . . . that’s kinda how I’m viewing getting net short and trying to be a hero right now . . . . .
Dumped most of QBTS . . . . . . very appealing entry . . . . Uranium stocks seeing the realities of where the real cash flow comes in . . . . Rare Earths willing to try and work with the market on how this shakes out . . . . quantum I’m rolling it to where I see right now explosive revenue growth . . . . . maybe I’m wrong
So apparently everyone is coming up with a couple trillion in new revenue by 2028 or so and spending a trillion on CAPEX . . . . . . so what is Nominal GDP then $45T . . . . I mean so many are gonna crush it they say . . . . . well then maybe Spooz should be at 10K . . . . . . . wait, what?
Leading Stocks on Thursday for sure and throughout the week did take some big hits Uranium for sure and others here and there but looking at the entire week the damage was not terribly significant in my view . . . .
IF and emphasis on IF . . . . . . there is follow through to what I saw Friday afternoon with junk debt and Leading Stocks . . . . then in my humble opinion upside bias remains until the indices are down big on big volume and closing at or near the lows for the day AND Leading Stocks are hit hard on big volume . . . and given the ‘Melt Up’ momentum we need to see Leaders absolutely throttled as there will be corrections and we still haven’t truly played with below the 50 EMAs just some teases thus far . . . .
“Until tech credit spreads crack” . . . . . . and we actually have relevant data to watch here right now . . . they are widening
Mining Update
Please consider these are positions specific to a mining business I control via entity. I might be active long/short BTC direct and/or TradFi to hedge/trade with/against the mining business exposure.
Sold BTC vicinity $122Kish, about 30% of the stash held from mining was sold, sitting in cash earning. Current posture is very heavy cash, zero short term credit balance. UPDATE: Sold almost entire Bitcoin stash for the mining business. Very heavy cash earning. Zero short term credit.
If/when the Money Flow for Bitcoin turns Green emphatically on the Weekly, I have lots of bullish options. I could buy spot, buy more machines, long BITU, long forward hash, and/or hold onto mining rewards for a considerable amount of time before converting to fiat. My posture will change based on the Weekly and Monthly Money Flow. If both are Green, then all tactics deployed to hold BTC as long as possible before converting any to fiat. If just the Weekly turns Green then start leaning into this strategy. UPDATE: The Money Flow is Green on the Monthly and Red on the Weekly so defensive posture continues. I am very heavy cash, all the bills are paid, and zero short term credit. I can get more aggressive but am not as of just yet.
UPDATE: SBIT sold. SBIT from $115Kish and will re-enter if need be but more open to a counter trend move in the shorter term.
TBT light (sold a chunk off), UUP
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Alex Grey
Metamorphosis
