2022-11-27

Greater Idaho

Unlike some moves such as Western New York breaking away, this move will not affect the evenly divided U.S. Senate. 'Greater Idaho' Moves Closer To Bi-State Referendum As Two More Oregon Counties Vote To Leave
“We’re about matching government to people and their values. You get rid of polarization and tension by matching people to the government they want,” McCaw told The Epoch Times.

Palladium Again

A breakdow is bearish for the Nasdaq. If it falls into year-end, the yearly candle will be a gravestone.

Chinese Have Had it With Lockdowns

Be skeptical of Western reports of protests. The Chinese have a different conception of government and their relationship with it. Some areas have had it with strict lockdowns, but notice most people are wearing masks. They aren't wearing masks to thwart the surveillance state. The main takeaway is the negative mood is boiling over with new rounds of lockdowns. Everyone in and out of China can see another long winter of lockdowns coming as long as zero-covid is the policy.

Perhaps the protests escalate, but there's no evidence of that yet.

2022-11-25

Will There Really Be a Diesel Shortage?

I'm skeptical about the diesel shortage. There is chart evidence both for and against. The two important charts are below. If you'd like some more discussion, see it here: Clearing the Smoke: Diesel Edition

Bearishness Intensifies: China Cuts RRR Again

Update: For more discussion, see the post over at Substack: The Based Take on China's RRR Cut

ZH: China Cuts Reserve Requirement Ratio By 25bps, Boosts Economy With $70BN In Fresh Liquidity

Below I've reproduced my post from December 6, 2021: China RRR Cut is Bearish

ZH: China Cuts RRR By 50bps; More Easing Expected

Specifically, the PBOC cut the RRR by 50bps effective 15th Dec. The move will release CNY 1.2 trillion in liquidity - some of this new money will be used by banks to repay maturing loans from the PBOC’s medium-term lending facility and some of it will be used to replenish financial institutions’ long-term capital, the central bank said. There are almost 1 trillion yuan worth of the 1-year loans maturing on Dec. 15, the day the cut takes effect.
It releases zero trillion in new lending. It eases financial pressure on banks who are probably running into some trouble because of the strong dollar. Look at the chart posted with the article. The RRR cuts come during the taper. They occur before yuan depreciation in August 2015 and before a broad global sell-off in risk assets in autumn 2018.
I am thinking about the time and place of the next panic.

2022-11-24

New Covid Lockdowns Spurring Rumors

163.com: The closure of Beijing Railway Station is a rumor
On the evening of November 23, it was reported on the Internet that "Beijing Railway Station was closed for the first time in 63 years, and it will be recorded in the history of the station." The reporter learned from Beijing Railway Station that this news was a rumor.
Meanwhile in Henan, the newly hired Foxconn workers are being paid 10,000 yuan to go home.

2022-11-20

New Losers

Three of the largest (by market capitaliztion) losers on high volume on Friday. I have puts on MSCI. No positions on the other three. WSM is a bonus, chart looks good for bears.

I'm Shorting the Gap

That's quite the gap that's opened up between XLE and CL. There's a roughly 20 percent peformance gap open. It can go wider, 30 percent wouldn't be impossible, but this type of directional gap where one rises and the other falls is rare. This isn't necessarily going to close then, but the inverse correlation should end. Since XLE looks like a double-top here, I see XLE as offering similar downside potential as CL or USO, but without outperformance potential (for short positions) should the gap close.
Here's how performance went in 2014 and 2018. The latter looks more relevant to me given rising rates and falling stocks as part of the backdrop.

2022-11-18

Are We Done Here?

The elevator doors are open and there is no elevator. Will the market step in today?

2022-11-16

One Last Bear Rampage to End 2022: Stapled Consumers

One Last Bear Rampage in 2022: Communication Services

One Last Bear Rampage for 2022: Semiconductors

Looking at the ascent on some of these, I think I might go 10 percent or more OTM on options. My expepctation is they will descend faster than they ascended. KLAC gained 57 percent from low to high in barely more than one month. My expectation is it will trade at a new low, which would require a minimum loss of 365 percent. TSM doesn't have the greatest chart, but it gained 40 percent in two weeks. Likely to lose it all as fast, if not faster.

Based Money

A ratio chart of two important monies has based.

Most Recessions Start a Year After Steepening

Most recessions start at least a year after the yield curve starts reversing higher. There already was recession in Q1 and Q2. Maybe there isn't now, or maybe inflation is being undercounted. Either way, not a good outlook.

I posted some trades over on the Substack.

2022-11-15

黑兔年

Black Tuesday

Black Monday

Year of the Black Rabbit

A different look at the HYG/TLT ratio. The candle forming is confirming at top.