War is a Racket

The last week was a turbulent one, with the Iran/Israel conflict taking markets by storm. VIX spiked, and oil rose almost $15/barrel in a matter of days and missiles started to fly. I’ve traded through and predicted numerous geopolitical events over the past years, and in this letter, I’ll focus in on a few key themes you need to watch at this catalyst develops. Overall, it’s important to remember that WAR IS BULLISH.

June 1^st :

June 17^th :

Looking at the previous Israel/Iran conflict, it’s important to note that lows are usually put in on major headlines. This was the same with Russia/Ukraine. This one will be no different so I’ll be keeping my eyes peeled as things develop. Iran has a massive land army that dwarfs Israels, however their capabilities across the sky are significantly less, and inventory of hypersonic missiles is likely low. The ability for Iran to launch a full scale war at this stage is likely severely limited with many of their airfields, missile sites, and top leadership already taken out. Any land campaign would see Iranian assets pushing through Iraq and Syria, over a thousand miles where they would be sitting ducks for air support.

Right now, it’s difficult to predict how bad things will get, however the market is obviously eager to rally… dips are to be BOUGHT and the market will react FAST.

The past few weeks have been tepid and frankly frustrating to trade. The market’s been largely devoid of high R/R opportunities as volatility has cooled off. The one chart I can pound the table on here is DXY… the dollar is at the bottom of a decade + long support channel, and is highly likely to rally in the coming weeks and months. This will put pressure on dollar denominated assets, particularly gold. Currency traders would be wise to get long USD/JPY and others.

The entry is not ideal yet, but I will short gold on any new highs. The combination of a potential USD bottom, and war headlines cooling should send gold back down by hundreds of dollars. My entry will be in the $3500-3550 range, a marginal new high.

Oil could rise significantly IF the $77~ area is taken out, however this would take a catalyst like the Straight of Hormuz being blocked, in which case this would likely drag the US into the war…

Global M2 is till rising, the despite it’s popularity, the M2/BTC correlation remains strong.

I’ve been watching AAPL – and like the posture here. I’ve started a half size position in October 19^th , $240C for around $1.9. I am willing to add lower.

KWM may be one of the best bitcoin proxies for the time being… this is a high risk RTO that plans to become the “Metaplanet of Korea” – targeting an underserved market (at least on the public equity side) which has a voracious appetite for crypto. IF we get a dip today or tomorrow in BTC, and KWM trade below $4.20~, I will buy…

Keep in mind my hunting analogy from the last letter. Stay patient for the coming weeks – the war situation can easily escalate and push markets back down again until we get a significant headline to put the bottom in… If I see an obvious setup I’ll send out a special report. In the meantime, stay patient, and remember my hunting analogy from the last report…

TLDR;

1. The high cash we’ve recommended over the past weeks has served us well

2. Only deploying a small amount in AAPL

3. Getting ready to short Gold at $3500-$3550 area

4. DXY is going to put a bottom in, and it could be major

Trades:

1. Adding AAPL October 19^th 240C around $1.90

2. $COLLAT has fallen 50% which is very frustrating – still have a lot of confidence in this project so hold here.

3. MARA and WULF should continue upwards into late summer

4. Buying KWM, IF it dips to the low 4’s (and lower)