Good morning,

If anything, the recent events of the “bear raid” of 2021, we should have gained a better understanding of the meaningless term of “valuation”.  YOLO, as they say on Wall Street Bets.  “You only live once” – sounds more like the title of a James Bond flick starring Pee Wee Herman. We’re seeing companies with no earnings, and zero fundamentals rise +1700% from basic short squeeze mechanics. Fair game, is what I say. The “big boy’s” are getting beat at their own game, and the Wall Street Bets band of retail investors seem to be well organized. I don’t know how this ends, but I do know when you look back in the history books, there’s usually a harbinger of doom that with the benefit of hindsight you can point too and say “that was it”.  I don’t know, so we’ll just leave it right there for now. 

Running it back,

Stocks- correcting -2.9% in the SPY, -3.6 in the NQs.  No change to our Macro outlook of Growth/Inflation accelerating thru the end of Q2 2021.  I need to stress this, because when markets get sloppy, people become disorientated about the cycle.  No change to our Growth/Inflation accelerating outlook.  The question remains “how deep” is this correction….5-10%, and maybe the better question, how much of these accelerating economic conditions in the first half of 2021 been pulled forward?  This is what I do know, when Volatility aka VIX spikes to north of 30.00, it becomes very difficult to manage risk in the near-term.  This is where our range analysis (of course the chart below) comes especially in handy.  We’re going to trade the chop using the parameters below, following the trend, and our macro fundamental view. 

Yields- 1.01% on the 10yr yield, flat from yesterday.  We could see 0.95-0.92% ….. could.  But that doesn’t do ANYTHING to change our view of where we think yields are headed this year.  Remember, its Jan 28th…’s a long year, and we plan on carrying “Short Bonds” as a core position for at least the next 3-6 months.  YOLO…

Gold/Silver/Platinum- Not out of the woods on metals yet.  Gold still looks sick here as well, there’s potential for another drop off to 1800.  Silver and Platinum look like they will outperform in coming months based on fundamental/industrial/supply side fundamentals.  The back drop remains Scenario 2, therefore we’re buyers of all commodities carrying a bullish trend, at the low end of the range – THIS DOES NOT INCLUDE GOLD, GOLD REMAINS BEARISH TREND. 

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John Caruso

Senior Market Strategist
Follow John on Twitter @JCarusoRJO. John began his career at Wilshire Quinn Capital, a Wealth Management Firm based out of Los Angeles, California. John made his move to the commodity industry at the end of 2005, and began his path at Lind Waldock, at the time the largest retail brokerage division worldwide. John did his undergraduate work at Robert Morris University in Pennsylvania from 1999-2003, where he was a 4 year varsity basketball letterman.  A self-professed “Macro Trader”, John uses a multi-factor fundamental and “quantamental” trading model in distinguishing market cycles based upon the accelerations or decelerations of growth and inflation metrics. His technical and quantitative approach is heavily reliant upon trend and market range analysis via a custom built standard deviation system in helping him make probability-based market decisions. John is an avid reader of all things pertaining to finance, and behavioral economics. Click here to sign-up for John Caruso's Trading Coach Insights. Daily information and insight on all futures marketsin ranging from metals to equities.
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