This Is Not Investment Advice
Spooz Rate Cut Odds Divorce . . . . Again Nothing Is For Free . . . . ‘Melt Up’ Stalls When Called on For Follow Through
Put out a significant Hedging Update on Friday and shown here.
I also want to emphasize the report shown below which listed three things driving Risk On/Off in a broader and general sense (among many other factors):
Of the three things mentioned - in my view one remains the same and the other two have changed somewhat.
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YCC - same
Real Rates - different, see below
AI Lag as QE - same but parameters under heavy scrutiny, see below
Let’s get a little granular on some of what caused me to shift my posture this week. Bigger picture, let’s see how PLTR looks on a stretched out Weekly Chart:
Market Cap is around $450B so although valuation is NOT a good timing tool, the forward PE at 300+ when growing at let’s say 40% when you already have a massive Market Cap is not sustainable in my view.
When I look above I see a strong Green Volume bar when the ‘Melt Up’ started brewing, but all the high volume bars since are Red. More recently, it simply has not gotten strong upside Volume moving and the Money Flow is now Red on the Weekly. CEO picking fights with investors as well not a good look. Crazy to think it might take a breather if given the chance?
CLS 4HR
#1 ranked stock in the entire market. Note the solid juice and sizzle last Friday . . . . but reality is the Money Flow on the 4HR never went Green this week. Think about that. Four trading sessions and a light Holiday session and a Lower Time Frame Money Flow didn’t even turn Green.
QQQ 4HR
Last Friday the surge turned the 4HR Money Flow up and it popped Green at least briefly. This week that was not the case . . . . . 4HR Money Flow stayed Red all week. Where’s the momo?
More and more chatter about QE is coming to the surface, and I get it. As stated before, absent an event that impacts bond market liquidity or banking plumbing in general, I can’t see the explicit need for it at least until the end of 2026 in terms of the Treasury’s forecast and what not. Let’s revisit some perspective:
The above includes data through 11/5. Back in 2020 the Fed publicly and explicitly stated it was not only expanding the Balance Sheet but also getting long junk debt! In my view we do not have that scenario now (as of yet) and it serves as a stern reminder as to how dramatic intervention has been in the past relative to now. That said - reserves have dwindled and it is more obvious by the day that something or someone will have to step in to keep the AI dream alive at some point if the Arms Race continues unabated.
Nice one again from The Market Ear at ZH:
Looks like dwelling costs in general can provide a buffer for inflation data and hence a buffer for Risk On potentially over the coming months:
Think of it like Weekly Money Flow being Red. If rents are down and dragging for months, it will be mathematically harder for the inflation data to rise in a way that would force the Fed (the new Fed with a new Chair mind you) to flip hawkish.
Speaking of Fed posture . . . . . that is one of the things that in my view has shifted in a somewhat perplexing manner. Granted lack of official data . . . . . but I struggle to see what since the shutdown has made one more concerned about PCE rising on a relative basis from here. It appears to me at least the labor market is only getting worse in the sense of lack of job creation. See more in Risk On/Off section below.
Bitcoin Monthly
Bitcoin Weekly
Bitcoin Daily
Solid points here made by Glassnode . . . . I would add this conceptually and tempo wise aligns relatively strongly with Money Flow:
MVRV-Z Score
Liquidation Heat Map - Two Week Time Frame
Bitcoin Bottom Line:
Let the market tell/show us what is next
In my humble view (and observing closely since 2013) the last couple years industry has veered off track attaching itself primarily to initiatives that entirely rely on bullish price action . . . . . . government not the obstacle now . . . . . . Square’s thing is very good . . . . . highlights something ONLY possible with Bitcoin let’s do more of that . . . . . . capturing excess energy and converting to value should be very high priority perhaps Bitcoin’s most important innovative feature . . . . adoption and growth in usage, transactions, nodes, Lightning Network - focus here . . .
We arrived into the zone discussed here for months now the $95Kish - $98K Volume Point of Control . . . . . . . . even more confluence is in the $91Kish - $94Kish area . . . .
$91.4K and $94.1K
$100.4K
$103Kish
Any type of bounce in the short term to intermediate term has to get above that 50 Week EMA at a minimum, and preferably getting a Weekly Candle to close above that as a start . . . .
Ironically the most efficient way to jack up the energy/power/electricity ecosystem in America is to shine a big, shiny spotlight on how much that energy is worth . . . . . revalue Gold and start buying Bitcoin to light a fire under the energy infrastructure ecosystem . . . . and keep credit risk low . . . . . with DC so hostile the two parties will not work together so we are in a war think of the things that you can do (like revaluing Gold) . . . .
Again - the industry in my view needs to emphatically and strongly emphasize legit and useful use cases where RIGHT NOW something is ONLY possible because of Bitcoin (payment fees close to zero, capturing excess energy, mining, microtransactions for rewards, Lightning, etc.) . . . . . . . and forgive me for the tone but this is getting to a Mission Critical state . . . .
Risk On/Off
Some notes from The Big Picture from Investor’s Business Daily:
Here are the top Industry Groups from Investor’s Business Daily:
QQQ Weekly
QQQ Daily
HYG Weekly
HYG Daily
NVDA Weekly
FLEX Weekly
CLS Weekly
AGX Weekly
AI proxy.
EME Weekly
AI proxy.
Risk On/Off Bottom Line:
Real Rates on the 1YR here’s what has changed in my view . . . . almost as if on purpose Fed jawboning has shifted the market away from perceiving the Real Rates on the notional 1YR to be as close to Negative or Negative as was the case prior to the last couple weeks . . . . . Fed yapping Hawkish and letting market focus on 2% target when for a period it was letting the inflation target drift away (and see divergence Spooz and cut odds) . . . . maybe I’m wrong but to me right now Risk On is not seeing that juicy one year being negative or dangled as such . . . . also the built up anticipation of ONLY going Restrictive to Neutral meaning lot more in the ammo shed - Fed jawbones doing their best to yank that away for now . . . . .
AI Lag being QE for now what has changed in my view . . . . . market gettin’ fed up with the games and attempts to push the ‘Melt Up’ beyond some of the actual barriers and factors we have discussed . . . . . ‘Melt Up’ might need some time with 200 EMA and to recalibrate around what figures for power and energy projection are legit and credible and what financially is plausible . . . . that is a good question how on Earth can OpenAI pay ORCL (and other vendors!!!!) $60B a year a couple years from now . . . . . . so DIRECTIONALLY yes on ‘Melt Up’ overall and yes on AI being a thing and moving forward . . . . but all the numbers need to be recalibrated and perhaps that means more price discovery . . . . spreads aren’t tightening . . . .
Yield Curve Control already being underway . . . . no changes that I can see
Quantum and BTC related stocks tipped us off a couple weeks ago . . . .
KRE not plunging but not exactly roaring higher either . . . . .
Still aboard the ‘Melt Up’ in a broad sense especially the Mission Critical aspects and our needs for energy/power/resources but the AI portion is under more scrutiny so though I love the businesses (say AMPX and EOSE as examples) my senses have me on alert to be even more open minded to all possibilities . . . . . we still have not spent time doing any price discovery below 50 EMA and above 200 EMA . . . . 75% of stocks follow the overall market trend . . . .
Weekly Money Flow on NVDA is definitively Red . . . . reality
The “QE” that could arrive in response to plumbing in the short run looks more like mop up duty than a sustained Asset Purchase Program . . . .
Market already knows about the TGA and impact on liquidity . . . .
All the ‘Melt Up’ plays are my current Watch List plus others yes for sure the market could rip higher and I will be watching . . . . . focus now is on finding good short candidates (not directly against the ‘Melt Up’ but from the groups discussed) while monitoring Leading Stocks and Watch List to see what the market is actually doing right now and which Industry Groups and stocks are showing the best Relative Strength . . . . .
Max Pain could either be the pros and shorts losing out on the rip “end of year rally” . . . . . or it could very well be the end of year rally not happening . . . . . . unlikely flatlining is Max Pain in my view
China has massive edge on energy/power capacity so the ‘Melt Up’ needs to see credible strategies and data on a realistic plan to close the gap to include if it needs government funding assistance . . . . .
Was specifically looking for legit follow through from the strong bounce last Friday . . . . and we simply did not see that and even worse is that Leading Stocks did not keep it going . . . .
CLS has me thinking here’s the #1 ranked stock overall delivers great results and a forecast and the market rewards it . . . . . then we have a dip and the bounce last Friday and it rips up . . . . . then the Money Flow didn’t show up to Follow Through this week so why . . . . . nothing changed with CLS but investors are shifting and that matters . . .
Regardless of politics and views the reality is that with the Holidays and everything else the Fed could easily play thorn in the side of the current Administration until May . . . . mid-terms coming up . . . so whatever drama unfolds what matters is what the market is telling me right now . . . .
In my humble opinion no huge directional bias jumps out at me living between 21 and 50 generally at this juncture . . . . . . . what jumps out at me is the lack of Green Money Flow and loss of momentum . . . .
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 can come back into play at any time.
TBT light (sold a chunk off), UUP
Check recent posts for Single Stock Shorts
Matthew Wong
The Illuminated Path
