Issue #54: Fund Managers Just Rang The 2022 Bell
My flagship indicator is now free. Meanwhile BofA just posted the largest equity overweight jump ever recorded. Read that twice.
Apologies for the delay this week. I have been extremely busy and had a whirlwind day yesterday. Regardless, one day late is better than never. Let’s get into it..
TL;DR.. The Big Three
The 8th Rule is now free. Public on TradingView. Optimal settings included for SPX, BTC, ETH, Gold, and high-beta alts.
BofA’s Fund Manager Survey went from 13% → 50% net overweight equities. Largest single-month jump ever. Last comparable spike: January 2022. You remember what came next.
MRE stays Risk-On, but with cracks. Liquidity downgraded from easing to neutral. Materials flipped neutral. Bond yields ripping post-Warsh confirmation.
The Signal: Still Risk-On, But The Edges Are Fraying
The Macro Regime Engine is holding the line.. 18 votes Reflation, 16 Goldilocks, 8 Inflation, 5 Deflation. That’s still firmly risk-on, but we lost a notch this week. Materials flipped from 100% bullish → neutral. The May 18th print was the closest we’ve come to a regime wobble in weeks.
The new 2-year vote-count history strip (bottom of the dashboard) is showing the degradation in real time. Worth watching.
Positioning unchanged:
SPYM: Full risk-on, core sleeve
BTC: 50% (still above the 120-day SMA)
Gold: 50% (meandering, close to flipping risk-off)
ETH: Risk-off (engine pulled us out before the dump.. exactly the job)
Bitcoin Trend: Holding 50%, Not Loving It
Price action isn’t pretty, but no input has gone bearish enough to flip the position. We’re still above the 120-day SMA, which is the line in the sand. BTC was up ~$2k on the position at the local high, now ~$500 in the green.
On-chain tape is quiet and slightly soft: Supply-in-Profit rolling over, adjusted NVT rolling over, retail volume rolling over off the $82K local top. LTHs accumulating. STHs puking. Standard mid-cycle behavior.. no panic, no euphoria.
Stress, Liquidity & The Warsh Era Begins
Financial stress: Generally okay. MOVE index ticked yellow then cooled. Dollar showing strength.
Global liquidity: Downgraded from easing → growing (neutral). YoY rolling over. This is the one I’m watching.
Macro Weather: Tailwind for stocks + BTC. Neutral gold. Weak tailwind commodities. Headwind bonds (improving slowly).
Bond yields: 10Y and 30Y ripping post-Warsh confirmation. First Warsh meeting is June 17. Hawkish or dovish? Binary event.
The Data & The FedWatch Curveball
Quiet macro week. Philly Fed printed -0.4 vs 17.6 forecast (noisy series, don’t overreact). Flash Manufacturing PMI beat hard, Flash Services missed slightly, Consumer Sentiment missed.. the post-2020 downtrend is still intact.
The interesting print: FedWatch is now pricing rate HIKES.
June: 4% chance of a hike
July: 17% chance
September: ~40% chance of a hike, 0.6% chance of 50bps
Inflation is back on the menu. Strait of Hormuz noise, geopolitical churn.. the engine will route us out if it matters. That’s the whole point of running a system.
The Receipts (Portfolio)
Did a whole lot of nothing this week. Bull put spread (~$234 profit, week one), BTC 50% (~$500 up from $2k), gold flat-to-ugly, SPYM core. Money where my mouth is. The engine said hold.. I held.
Final Thoughts
Two competing signals this week:
Fund managers are the most crowded long they’ve been in years.. the last time we saw a move this aggressive was right before the 2022 top. Semis are the most crowded trade on earth. When everyone is in, who’s left to buy?
My engine is still risk-on. Liquidity is softening. Materials flipped. Yields are ripping. The cracks are forming, but the structure is holding.
This is the binary setup. Either fund managers are early to the next leg up and the melt-up continues, or they just rang the bell on themselves, again. I don’t trade vibes. I trade the signal. The signal says risk-on, with a finger hovering over the eject button.
And the 8th Rule is free now. Go grab it. The paid tools.. MRE, Arsenal engines ($NVDA done, $GOOG + $AAPL incoming, Sortino 1.9 on $NVDA) are where the real edge lives, but the public stack is solid enough to keep most people out of trouble.
Touch grass this weekend. Memorial Day matters.
For this week’s full video breakdown:
— Durden out.
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Disclaimer: This content is for educational and informational purposes only. It does not constitute financial advice, investment advice, or a recommendation to buy or sell any asset. Trading equities and futures involves substantial risk of loss, including the potential for loss exceeding your initial investment.
Past performance, whether backtested or live, does not guarantee future results. Backtested performance has inherent limitations: it is designed with the benefit of hindsight, does not reflect actual trading, and does not account for all factors that may affect real-world execution.
The author is not a licensed financial advisor. Always do your own research and consult a qualified financial professional before making investment decisions. You are solely responsible for your own trading decisions.