Market When Closed, Sunday 22 December

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Interns, Algos And Basement Jacks

by Alex King, CEO, Cestrian Capital Research, Inc

Look, if you run any kind of serious money manually, you aren't going to be at work this week. You will be hedged out and/or de-levered and/or de-grossed, sat somewhere warm a few miles away from the private aviation terminal, contemplating life. The office lights will be on, of course, but the only actual people allowed to move money around will be the junior cadre, allowed to play with accounts big enough to get them fired but not get you fired. As it should be. Then you have the machines sat trying to out-RenTech RenTech. They will be whirring away keeping Jensen happy. And finally you have Jack, sat in the proverbial and often actual Mom's Basement, who is likely stacking Saylors in a quest to be just like his hero. (The never-ending ATM facility in this case will be Mom's purse upstairs).

Stocks may rise or fall this week but either which way, these moves will not be determinative of what happens in 2025. Markets in 2025 will be determined by what conclusions are reached by bigs as they ruminate over the holiday period. I myself plan to do something similar. I don't plan on taking big risks into year end. I wound down positions late Friday last week to bank gains and reduce exposure and specifically sold out of the riskiest names I owned. I remain positioned long but I want to come into 2025 lightly loaded with plenty of capacity to follow the market up, down or sideways, wherever it chooses to go.

When the herd was screaming !recession!, !SPX2000!, in the second half of 2022, I felt very confident that the narrative should be ignored, and price action respected. 2022 was actually a rangebound, sideways year from around April onwards; the S&P500 and the Nasdaq, and for that matter the Dow, were under rangebound accumulation for around a year from April 2022 to April 2023, before breaking bigly to the upside. If you've been a member of any of our pay services in the last couple years, I hope you've been able to take advantage of the correct market and stock/ETF calls we've made, from the depths of that bear market to the present time.

Now, today the herd is screaming !you aren't bullish enough! and is urging folks to load up on the riskiest of assets. Microstrategy ($MSTR) is the poster child for this. In the end, an asset wrapper is worth the underlying asset, not 1.5-3x the underlying asset, and so it will be with $MSTR. Perhaps not tomorrow or next month, but ultimately there's no reason that $MSTR's premium to NAV will remain this high. Many will be hurt, I think, as the air comes out of that balloon, and the same will be true of the in-vogue quantum computing and other high-beta themes. The trick, as always, is to follow price not opinion. If MSTR or other stock du jour is going up, be long, sure; if down, be short or avoid according to your risk appetite. Have no near-term opinion about where any particular stock should be priced, just respect where it is priced and, based on standard chart patterns, where it may be priced next.

My plan for 2025 is, to borrow a lovely turn of phrase from Chris Ciovacco , to start the year with "a flexible and open mind". With clean charts, cleaned-down accounts, well-slept, energized and ready to play Atari Pong once more with wherever the market goes. I rather suspect 2025 will see more volatility than that to which we have become accustomed of late. That will make for a more fraught time but a no less profitable time if one keeps a flexible and open mind (and plenty of spare cash and/or margin capacity to twist and turn with the market).

In our Inner Circle service we have all the tools we need to deal with a continuation of the bull, a flip to bear, or (my best guess) an unpredictable rollercoaster ride of a market. Long, short and hedged strategies; ETF and single-stock strategies; longer- and shorter-term trade ideas.

Short- And Medium-Term Market Analysis

So let's start the final run into year end. Don’t forget that to open full page versions of any of the charts below you can just click on the underlined header which titles each chart - they are all hyperlinks.

Any paid subscription here gets you access to these daily Market Notes. Inner Circle gets you, amongst other things, real-time trade disclosure alerts whenever Cestrian staff personal accounts are about to place trades in covered stocks / ETFs.