Naughty or Nice?

On October 29^th in my last letter, I emphasized extreme caution given the massive measured move on SPX, and warned to hold off on any buying and maintain high cash. “Everything has been priced for perfection, which makes the market vulnerable here to another pullback.”

What followed was a 300+ point correction in SPX, and even bigger correction in the Nasdaq, and a lot of the high beta speculative plays got massacred 30-50% in a matter of days. Narratives which were “changing the world” were suddenly bad investments. It’s funny how sentiment works….

On twitter I even narrowed down the exact day of the top, and the November 7^th squeeze. So what’s next? I think we are setting up a Santa Rally here. We may have one more low this week, into 6500~, which would be a BUY. The lows may also be in here. I am only going to post trades if we make another low into the end of the week, so stay tuned. I’ll do another newsletter as a special report. The chance of a santa rally here is strong, but I am also not going to risk a huge amount of capital, as the trend is down and risk of a deeper correction is still very possible.

For BTC, in the last edition we expected price to keep moving down, but it went lower than expected and has found support around 90k. I have timing here for a low today or tomorrow – so the R/R for a bounce to 100k~ is very favorable here. Whether that becomes the major low, we wont know without the benefit of hindsight.

On miners, after calling the EXACT TOP on October 15^th , in our last newsletter emphasized risk still remained, and since the top we’ve dropped around 40%. While there is some support here for a rally, I wouldn’t buy the sector back unless it hit the mid 30’s. Patience is the name of the game here.

On Total Cap, we are nearing MAJOR support (the prior All Time High). We could squiggle down another 10%, but it is in the zone. A bit lower would be ideal for a more significant low.

MSTR often gives signs on which direction the market will go (it tends to lead), and it’s looking setup to run… If you were to buy anything here, I would be tempted by some MSTR straight stock. The options are extremely expensive, although you could sell puts here with the intent to acquire and capture some premium along the way.

TLDR;

1. The risk off/bear warnings of the last month have been spot on. Risk remains

2. A bounce in bitcoin to 100k started today/tomorrow

3. S&P can bottom this week

4. Risk remains on macro however, tread lightly

Trades:

Nothing new this week - sorry for the “boring” letter – I would post some but the risk is still high here… I’d rather keep my cash until things clear up. Other traders/newsletter writers have been slaughtered this month in high beta, I am glad we largely sidestepped this…