Joining us yesterday on Talking Markets was Tom Thornton, founder of Hedge Fund Telemetry and author of Hedge Fund Telemetry One Chart here on Substack.
He brought his usual straight talkin’ or as Murphy put it…
Tommy said there will be a point where he comes on Talking Markets and be a raging bull but that day was… not yesterday.
THE “RANGE OF DEATH”
While many markets stabilized yesterday, Tom doesn’t think we’re through the ‘meh’ patch yet. “I don’t think we’re through this period yet,” he said. “Back in October, the NASDAQ peaked and hasn’t made a new high since. The S&P has made nominal new highs and we’ve been in this range, and it’s sort of the range of death - not being able to get enough on the downside to buy dips, and not really getting new highs either.”
WARSH
Tom thinks the nomination of Kevin Warsh as Fed Chair was the catalyst for the nasty metals correction, as “the super dovish scenario didn’t happen.”
“I actually think he’s probably the best of the contestants that Trump interviewed, because he probably has the most experience with the Fed by far, and he’s been there in the trenches in some pretty hairy times,” Tom said.
He thinks “he will will have some semblance of Fed independence,” but that said, Tom still thinks bond yields are going higher as inflation may pick up.
STOCK NOMADS
Tom discussed the speculative crowd (which he also wrote about yesterday in Hedge Fund Telemetry). He calls them nomads: “They’ve gone from one thing to another, and they have no idea what they’re buying many times. And they just go because it’s green.”
Over the past few years those ‘nomads’ have gone for GME, crypto, NFTs, quantum computing, and then metals, and now memory chips too: “Memory chips [stocks] are going bananas on the upside. I am short a few and it doesn’t feel good right now, but it’s small positions, nothing to cry over.”
💡“Usually when I see people put price targets that have to go up 200, 300, 400% after a 100%+ move, I tend to fade those,” Tom said. “I look at those and think, well, that’s a bit of clickbait right there.”
That doesn’t mean the bull market in metals is over though - Tom says the administration wants a weak dollar. But he does think it would be wise to see what happens rather than buying dips.
BITCOIN
Tom is betting against BTC with a short position in the IBIT ETF. He says there are a lot of people “overly long and trapped” by previous good news, and says that Bitcoin is currently riding a “fifth wave” of a downward pattern, marked by a series of lower highs and a technical “Demark sell countdown 13” that signaled trouble back in the fall.
He said markets typically bottom out on total despair, and so far, Bitcoin hasn’t hit that “bad news” catalyst yet. He’s particularly wary of the “monumental” leverage baked into crypto, and says Strategy’s position looks “precarious.”
Worth pointing out Tom isn’t a BTC permabear - back when it was $15,000-$16,000, he was flagging DeMark buy signals.
TOM ON…
TECH
“You’re really starting to see the winners in the Mag 7 emerge,” Tom said:
Winners: Alphabet and Meta
Losers: Microsoft, Tesla
?: NVIDIA: “It’s just sort of hanging around”
VOLATILTY
There hasn’t really been a volatility spike “because I think vol’s been suppressed,” To said. “I think if you break some levels, you’re going to get it… You haven’t seen credit spreads widen, and if that starts happening, you’re going to have volatility go up.”
WHAT HE LIKES RIGHT NOW
“I like energy, I like some technology believe it or not - some in software are starting to line up for me because they’re steady earners and growth companies that make sense.”
RISK MANAGEMENT
“Kudos to the retail people that have done very well. You just gotta remember to step aside from the table after you’ve had a winning hand for quite a while. Book some profits. Don’t be too greedy, that’s usually what causes problems for people.”
TESLA
To the absolute shock and horror of anyone who follows Tom’s work (!), he is “not positive on Tesla” to put it mildly…!
Thank you phil dauber, daniel fox, Louis Philippe de S Bergeron, MP, Marvin Gardens, and many others for tuning in live! We’ll be back on Talking Markets tomorrow with the great Noelle Acheson.
Plus, for paying Market House subscribers we’ll have Macro Sessions with Luke Gromen. You might want to reach for something a bit stronger than coffee after listening to that one…
Important Disclaimer: It is crucial to remember that this article is for informational purposes only and should not be considered investment advice. Consult with a qualified financial advisor to assess your risk tolerance, investment goals, and overall financial plan.
