After spending a good amount of the last half year in risk-ON mode and good market conditions, it seems like the boat might be turning. And the turn is happening right around the Persian Gulf. The latest geopolitical escalation in the Middle East region has added a very new factor to the table which is inflation turning higher once again, due to rising energy prices. The last 3 monthly CPI reports for the US, clearly indicate that energy has been a major component of driving CPI prints to be higher than expected (along the shelter costs and rents). Even that those surprises have been very ..read more

As we enter a new year, one thing that is already quite clear from market perspective: It won't be boring and slow. Plenty of volatility is likely due to many macro events stacked on both the bullish and potentially bearish side. And most importantly: Bullish catalysts that are already priced in advance. Which makes the bearish side all but closed (downside surprises are more likely than upside). The surprise factors to the bearish side are bigger than the bullish side in my view, especially when it comes to equity and crypto markets because over the last two months, the huge rally in both ma ..read more

Just when markets thought the inflation was behind us a new situation shows up and derails the stability of forward projections. In case you are wondering, why this Red Sea situation is important and why should one care about it if dealing with markets this article should summarize it quickly. Markets currently do not care much about it, as there has been no reaction neither in equities nor bonds (except slight oil move higher). For a simple reason, this just like the 2020 covid situation is a slowly cooking event that will show up in inflation only over time. And markets will react only then ..read more

Since this is a very important subject, it is worth stretching the topic over three articles or more. Make sure to check the first article on risk profiles to get the basics before jumping further into this article: https://www.tradethematrix.net/post/risk-on-off-analysis-in-markets As already outlined, the risk profile analysis is a combination of looking at what the global capital is doing, or more specifically trying to identify whether global capital is in a defensive or offensive stance. If every asset on yields/bonds/USD/SPY/VIX aligns with risk-ON we know that global capital is easing ..read more

Risk profile analysis can be very beneficial for any trader or market participant. It is a cross-market analysis driven by the market cycles. Big asset classes drive smaller asset classes in their reaction (never the other way around), and therefore if one is trading or investing in smaller market cap assets (as many traders are) then paying attention to changes in risk profile flows is key. Tracking smallcap / exotic markets without paying attention to large asset classes will always leave impression of randomnes in moves, because one does not know from where does momentum originate. When tr ..read more

One of the relatively hidden concepts in the retail industry of trading is a risk on/off analysis. Or the term i often use "risk profile analysis". In professional circles of investing and even mainstream media, the risk on/off approach gets plenty of highlights, but in retail circles, it is a nearly taboo subject. You have more chances of rando-picking next 10X ticker than finding someone in retail who understands the subject. Many traders who trade SPY and large caps never bother looking into risk on/off or what in particular drives equity markets on a daily basis. This is why so much atten ..read more

Why MARA out of all crypto-related equities? MARA tends to be the highest volume traded and most liquid crypto ticker consistently. While it is true that many other crypto tickers (in equities) show up every once in a while which trade much higher volumes, most of those tickers will within a month or two deflate and lose liquidity. MARA keeps its liquidity relatively stable even in bear markets of Bitcoin. This makes it a consistent vehicle to play such a strategy. For those unfamiliar, MARA is a company that specializes in crypto mining, specifically Bitcoin mining. Companies' revenues are ti ..read more

For the second article on the 4th turning the focus will be on population structure/ classes and the dynamics that often takes place within such cycles, leading to the degradation of middle class of society and the solidification of elites as the result of tougher economic conditions and often chaos. The outcomes of 4th turnings can be two (using history as guide assuming that third or other options have no clear patterns): -One is the solidification of status quo elites as 4th turning becomes "managed or controlled demolition". Current status quo elites, consolidate even more power as they ..read more

Conviction level: High Personal stake: Short positions in certain indexes and asset classes outlined on article below. Expectations: Larger decline in SPY, defaults or liquidations of some financial institutions and credit market freeze. Broad scale economic recession or perhaps depression with minimum one year duration. No recovery of asset prices (stocks, RE, bonds etc) until the QE announcement from central banks somewhen in 2024 possibly. In my view, cutting of interest rates will not be enough to stimulate markets, therefore if rate cuts happen in later portion of this year (likely) it w ..read more

Houston we are ready for the takeoff in 3,2,1 Here we go once again, talking about everyone's favorite in small caps: The strong cycles. Regardless if you are a short seller or perma bull you probably enjoy trading around those market conditions the most, even if they end up hurting you (Stockholm syndrome says hello), because at least you know some other opportunity might be cooking up around the corner for redemption until the hot momentum lasts. Strong cycles have their sequence structure, and if you observe over many samples it tends to repeat quite well. That does not mean it gets easy t ..read more