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- Coiled Spring Capital Macro Report Feb 12, 2023
A quick note for readers of the CSC Macro Report. The founder of CSC and the main writer of this report had bicep surgery on Friday. He is doing well but is in a sling and has very little motion with his left arm. He is also still recovering but wanted to post some analysis for this week. Please understand that this report will be shorter than most as a result.
As we had postulated in our reports over the last 2 weeks, the SPX ran into a bit of resistance up near our 4200 pivot. For any newly minted bulls who thought getting over that very clear resistance zone would be easy, after the incredible run the stock market has just had, has not been studying market structure for very long. We warned explicitly in previous reports and even publicly on Twitter, that when notable bears begin to flip bullish after being bearishly positioned for the last 600 SPX points, we need to take warning. Since the historic start to the year, we have seen notable capitulations (Jim Cramer, Mike Wilson (removed his 1H bearish view), Puru Saxena, Larry Summers, etc).
Not only have we seen capitulatory evidence from public figures, but we have also seen sentiment sway in a major way. In our mid-week report, we highlighted the about face in sentiment (CNN Fear and Greed, AAII) and positioning (NAIIM) since the start of the year (please review last week's report for more detail).
We really get a kick out of the incessant bearish tone from the crowd who completely missed the last 600 point trade in the SPX and 2k point move in the Nasdaq. They continue to press their bets and publicly post their views as if they have been right despite missing a cool +20% move in the Nasdaq since the Dec 28th low. Coincidentally, we were telling our subscribers to buy that Dec 28th low in growth names. At the recent peak in the market (2/2), we were advising our readers to consider selling any tactical longs that we had been illustrating into residual strength. Now we are getting blowback from those very same bears saying "I told you so." What did they tell us? We nailed both sides of the trade. Would you rather be painfully wrong for a massive counter trend rally to eventually be right? Or would you rather profit from the long side and then profit from the short side? Seems like an easy answer.
Here are those excerpts from last weeks macro report detailing our cautious positioning:
"We surmised last week that the market would run into formidable resistance around the 4200 level and that's exactly what happened."
"We believe the next move in the market is likely lower and we would position for such, whether by raising cash, or using tactical index shorts....February into March is notoriously difficult for the market, and we suspect the setup for some reversion is ripe."
We also told our readers to exit gold 2 weeks ago.
And we advised buying the dip in oil at the exact low. Here is the excerpt indicating such:
"A new 9 buy could print tomorrow right around the TDST (green dotted line). We would be inclined to take a trading rental long if this prints tomorrow..."
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