The Week Ahead
One full of holiday cheer?
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Last week was one of the craziest we’ve had in markets this year.
The indexes all finished meaningfully lower on the week, though slightly up from their post-Powell lows.
The VIX index spiked Wednesday and closed the week under 20 but still elevated.
A new leading index dropped Thursday at the highest level since February 2022.
The economy is strong despite all the price action.
If you’re wondering what happened on Wednesday I’ll direct you to my post from earlier this week where I go over it in detail.
Friday Factors
On Friday, Size, Momentum, and the 3M EPS Revision led the small rally we saw.
Recall from last week that these are the “usual suspects” of this year’s rally.
I’m still skeptical of our ability to overcome last week’s market shock until these factors cool it and allow things like value and quality to breathe.
Looking Ahead
This week is short, with Christmas falling on Wednesday. Due to the holiday, we're also expecting low liquidity, which could make things interesting, given last week's volatility.
In general, I expect volatility to persist for a while. After Trump's win, we seem to have reached a fever pitch, and we haven’t fully worked that through the system yet.
Not to mention what has been going on all year.
A Note on Bitcoin
I am quite bearish on Bitcoin and crypto right now. I’ve recently gone net-short on Bitcoin, and the reason for this is simple.
Michael Saylor and Microstrategy have been propping up the market. In the last 45 days, they have bought almost $15 billion worth of Bitcoin and issued at-the-money convertible bonds to raise capital.
Microstrategy appears to have entered its blackout period, which means it is severely restricted from selling shares or converts.
That means Saylor and Microstrategy will be out of the order books for the next ~month or so.
It remains to be seen what effect that has on the price, but I’m fairly confident in one thing.
It’s heading lower.
Parting Thoughts
It’s been a fun year here at Mind the Tape. Our trades have done well, and I’ve enjoyed writing these posts for you. When I started writing this about nine months ago, I thought it would be helpful to write down my thoughts, and any readers would be a bonus.
Well, I’ve been surprised and flattered by the reception. I’ve gotten kind words about the publication from people I really respect, and it’s grown more organically than I could have guessed.
If you read and enjoy the newsletter, thank you! Happy Holidays.
Good luck out there this week.
Disclaimer: The information provided here is for general informational purposes only. It is not intended as financial advice. I am not a financial advisor, nor am I qualified to provide financial guidance. Please consult with a professional financial advisor before making any investment decisions. This content is shared from my personal perspective and experience only, and should not be considered professional financial investment advice. Make your own informed decisions and do not rely solely on the information presented here. The information is presented for educational reasons only. Investment positions listed in the newsletter may be exited or adjusted without notice.