“Soros saw no point in knowing everything about a few stocks in the hope of anticipating small moves; the game was to know a little about a lot of things, so that you could spot the places where the big wave might be coming.” ~ Sebastian Mallaby, “More Money Than God”
Q3 2020 hedge fund letters, conferences and more
Good morning!
In this week’s Dirty Dozen [CHART PACK] we look at ALL the signs that stocks are setting up for a sell-off in January, talk about why it might be a good time to start buying bonds, and then cover the new bull leg that precious metals are embarking on, plus more…
Let’s dive in.
- BofA’s latest Global Fund Manager Survey came out last week. The takeaways with highlights by me are below.
- Fund managers are holding their lowest cash positions since early 13’, triggering BofA’s Cash Rule “sell signal”.
- They also love equities here… Investor optimism is at its highest level since Jan 18’.
- And a “record net 76% of investors expect a steeper yield curve; higher than 2008 Lehman bankruptcy, 2013 Fed Taper Tantrum & 2016 US Election..” @MacroCharts shows how past YC expectations have lined up with bottoms in gold.
- BofA’s Bull & Bear indicator rose to 6.7 last week, its highest reading since Jan 20’.
- SentimenTrader notes that Dumb Money Confidence is at its highest level ever.
- Total ETF Fund Flows shows people are piling into stocks…
- While Foreigners are backing up the truck on US equities.
- Positioning and flows into small-caps has become particularly extended. Its chart has formed a rising wedge, it’s in a Bull Volatile regime, and is about to enter a period of weak seasonality once December ends.
- With high trend fragility in risk assets, it might be time to buy some riskless assets. UST 10-year yields have a tendency to fall (bonds up) when yield-curve steepening expectations are this high. We’re at the point where the Good News has all been baked in.
- There are only 8-trading days left in the year. Here are the YTD total returns by market.
- Precious metals are breaking out on what will likely be another major bull leg higher. Silver is showing relative strength out of the two and there a LOT of good-looking charts in the miners. Here’s the technical setup on EXK. Like a Russian Doll, there are wedge breakouts within wedge breakouts on various timeframes.
Stay safe out there and keep your head on a swivel.
Co-Founder of Macro Ops. Alex is a former US Government Counterintelligence Professional, U.S. Army Interrogator, and USMC Scout Sniper. He’s an independent trader with over 10-years in markets.
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