Tape musings...

Here is the video explaining the Quads (will always include, so you have a reference).

O.k., let us dig into it:

We still have a Quad 2:

See above for the stop loss level of this Quad2, we are close to the stop loss, follow through on the Quad 3 to Quad 2 transformation is weak.

Breadth is not behaving well at all.

Also, Oil is very strong:

We have an uptick in inflation:

We could easily transfer to Quad 3 again (Quad 4 is nowhere to be seen right now!).

The easy comps for inflation are over and Oil is ripping. That basically means the Fed will raise further. Higher for longer is the name of the game. I can easily see a fed that raises further and will not lower until the end of next year!

But what are the expectations of the market? COT shows everybody and my friend is long Bonds, so the market is expecting fed cuts soon.

On Stocks the positioning is neutral.

I see the Oil bulls in victory lab. The problem with every Quad 3 is: it must be destroyed by the fed, their mandate is to kill inflation, so every victory by the Oil bulls will be a short one:

Have a look at 2007 / 2008:

Above is the Quad 3 call on the backtest. Yes, Oil went on for months, but at the end of the day it gets dragged down by the Fed.

But as we can also see, Oil can go up for months (while the market tanks).

Therefore, (risk management first!):

Tactically I would concentrate on exposures that do well in Quad 2 and Quad 3!

1. BRKA (in Quad 3 with a 15-20% short on APPL)

2. Everything related to energy (in Quad 3 with a 40-50% short on IWM)

3. Small cap value momentum with a growth tilt (in Quad 3 with a 40% short on IWM)

4. Break outs in small caps related to energy (again protect the positions with shorts on IWM 0.00%↑ when we switch to Quad 3)

5. Watch Biotech, if it turns bullish trend, that can be a quad 3 play

No touch (Quad 4 exposures):

1. Bonds

2. Gold

3. Defensive Industry Groups

4. AND (!!!) Do not long cycs that do not profit from inflation

All the best and best regards.

Andreas

The information on from Andreas Himmelreich / QuantStrike and this video / blog is for information and discussion purposes only. It does not constitute a recommendation to purchase or sell any financial instruments or other products. Investment decisions should not be made with this video / blog, and one should consider the investment objectives or financial situation of any person or institution.

Investors should obtain advice based on their own individual circumstances from their own tax, financial, legal and other advisers about the risks and merits of any transaction before making an investment decision, and only make such decisions based on the investor’s own objectives, experience, and resources.

The information from Andreas Himmelreich / QuantStrike and this video / blog is based on generally available and paid information and, although obtained from sources believed to be reliable, its accuracy and completeness cannot be assured, and such information may be incomplete or condensed. All performance results are hypothetical and the result of back testing only. Out-of-sample performance may be different. No claim is made about future performance.

Investments in financial instruments or other products carry significant risk, including the possible total loss of the principal amount invested. Andreas Himmelreich / QuantStrike and this video / blog do not purport to identify all the risks or material considerations which may be associated with entering any transaction. Andreas Himmelreich / QuantStrike and this video / blog accepts no liability for any loss (whether direct, indirect or consequential) that may arise from any use of the information contained in or derived from Andreas Himmelreich / QuantStrike and this video / blog.