Sunday evening market thoughts

earnings preview and looking at the week ahead

China numbers for February came out today, they weren’t nearly as good as January’s numbers and do call into question *near term* that the Chinese rebound is happening and happening fast. Its still happening, but likely slower than the market is hoping for. Given how aggressively HK listings and other Chinese names have moved in and how high they’re flying, if the US domestic market bounces at all they should see a little bit of a pullback over the next few weeks.

The CPI drop was related to the shift in dates for the lunar new year. But the algos might spaz, creating short term pain.

That’s probably the last buying opportunity to get long them in size.

On the EU side of things do not long the EU banks here. In fact I think their will a bigger pullback here than I do in China.

BTC is another asset that is interesting to think about over the next 3 years. They’ve had a great fool as a buyers or the hopes of one coming to justify continued buying. The ETF was the big last one. But with governments pulling back on making BTC official currencies, at north of 100k a coin it stands to reason at some point there won’t be enough buyers to push the price of BTC meaningfully higher. I think its a great trading tool, but I’m not sure that you want to own it in a set it and forget it type way until a lot of the current bulls get blown out. I do not believe this will be a fast process.

One note on BTC’s price action this weekend. Its been trading like 3x beta QQQ position since the ETFs were launched almost a year ago. The pain its experiencing today is the same pain equity investors felt this week. Unless it clearly breaks below 80k and stays there this sell off isn’t that meaningful.

On the market side we’re indicating a futures open of +.1%, and barring any headlines over night I expect that open to hold. The big wild card will be continued deleveraging by the momo chasing pod shops on Monday. If it continues, there’s not enough bulls to stop the market from being continually weak, but if they are done, then we should see a sizable, 5 - 7% bounce before picking a direction.

The other big investor class we have to care about again is CTAs. They *should* be done selling on Monday. As the IRA bill and Yellen being gone have removed two major sources of liquidity the lemmings that make up CTA investors take on a more important role in the market. I dislike having to pay attention to them because they’re such a luke warm style of investing that seems to be set up to under preform by design, but they are a large group. So when its time to buy the market should push higher, and we saw this past week when they’re selling even in an up tape there’s not much we can do to fight it. Just another thing we have to pay attention to this year.