In this weekly note, we highlight 10 of the most important charts or themes we're currently seeing in asset classes around the world.
Running Out of Gas
After failing to hold a breakout to new all-time highs earlier this year, gasoline futures have fallen by roughly 50% in the past six months. Last week, both crude oil and gasoline continued their slide by taking out their 2018 highs. As long as energy futures are below these prior-cycle highs, we want to approach the entire sector with caution.
Check out this week's Momentum Report, our weekly summation of all the major indexes at a Macro, International, Sector, and Industry Group level.
By analyzing the short-term data in these reports, we get a more tactical view of the current state of markets. This information then helps us put near-term developments into the big picture context and provides insights regarding the structural trends at play.
Let's jump right into it with some of the major takeaways from this week's report:
* ASC Plus Members can access the Momentum Report by clicking the link at the bottom of this post.
The S&P 500 fell 3.4% last week, the 11th time this year that the index was down 3% (or more) in a single week. Only 2008 and 1974 had a larger number of such declines. Paired with the 9 times the S&P 500 has rallied 3% or more in a single week this year, 2022 has now moved ahead of 2009 and is only in third place (still behind 2008 and 1974) with 20 weekly swings of 3% or more in either direction.
We've currently only got one delta-neutral "income" trade on the books right now, but that one will be coming off sometime this week as it is comprised of December options which expire this Friday.
In a perfect world, I always prefer to have a least some delta-neutral short premium exposure in the portfolio to help us compensate for any sideways chop that the markets might serve up to our existing directional bets. It's a a nice portfolio diversifier.
With this in mind, today's trade will be in an ETF that is currently trading smack-dab in the middle of a four month range that I expect will hold for a least a few more weeks.
Over the last few months, I've started taking my fitness and my health more seriously.
In my first fourth months of strength training, I packed on 30 pounds and added close to 100 pounds on my squat and deadlift. I started out at a tiny frame for my height, so my progress has been no surprise.
While I've been growing at this rate, I've needed to prioritize my recovery. That meant eating tons of food, getting plenty of sleep, and only training three days a week.
It isn't rocket science.
In fact, it's the very physiology of training: stress, recovery, and adaption.
Without sufficient recovery, there is no growth.
Whether or not you're on a fitness journey, I think we can all relate to the pleasure of a weekend recovery. These two precious days allow us to review the events of the prior week while planning ahead for the days to come.
Our Monday crypto letter is a manifestation of this recovery process. It's our weekly "state of the market" that documents how we're approaching crypto as a collective.
I certainly get a ton of value from putting my thoughts down on paper.
This is going to be a volatile week, with CPI data tomorrow and the Fed on Wednesday. Be on your toes, monitor your positions, and have your stops tight.
The indices are in a battle zone. The $SPX is trading between support and resistance. The pattern is tight. $SPY needs to get above 398 in order to head higher, simply put.
Remember when they told you Gold was a hedge against inflation?
It wasn't.
Remember when they told you Gold was a safe haven asset?
It wasn't.
Remember all those times the Gold bugs made up fairy tales about future price appreciation for their rocks?
It never happened.
And so here we are. Well over a decade later, Gold prices are actually still down 6% from their 2011 highs. Silver is somehow still down over 50% from those highs.
Think about the opportunity cost of owning precious metals instead of pretty much anything else.
