Remember Not to Hustle Yourself

It occurred to me this week that there is now an active, roving wolf pack of short-sellers focused on Cathie Wood's ARKK fund (and her underlying holdings) who fancy themselves the next Michael Burry or John Paulson of a potential coming crisis.

However, it is worth noting that the global financial crisis came only after many a short seller had become too aggressive, too early in 2005/2006/2007. And, depending on their discipline, liquidity, etc., they either needed to wait it out, cover and re-assess, or got blown up before the main event began. This is a reality to be faced if you are keen on being a short-seller, regardless of your conviction and how brilliant your thesis may be--Just ask any number of dedicated TSLA bears over the last eight years or so. 

Fast-forward to the current market, and ARKK had numerous chances this week to totally wipe out, as Ms. Wood's flagship ETF failed to stage a bounce from oversold conditions below its 200-day moving average even as the market rallied yesterday, for example. 

However, ARKK and its various holdings like DKNG MTLS PLTR SKLZ, among many others, are off the mat today and may very well have caught too many overzealous (short-term) shorts leaning too heavily for a black swan event. Mind you, that event may very well come soon enough. But it is no consolation during the furious relief rallies and squeezes like we may be seeing now. Other growth names like ABNB after earnings simply look tired of going down. 

Overall, it is tough to turn too bullish on the market with so many former growth leaders sporting rough albeit deeply oversold technicals, all the while the rotation to value had become a bit too obvious and near-term crowded. But that does not rule out a few days of the ARKK types getting relief and resetting to clear out some of the roving wolf pack before we run into some more supply.

Tightening up timeframes and being willing to switch sides like a mercenary fighter makes the most sense now. 

Elsewhere, gold is putting in another workmanlike effort to slowly push higher. Has it occurred to anyone that this type of steady movement stands in stark contrast to the absurd swings in crypto? Which do you think is, truly, a more reliable currency alternative when push comes to shove?

Something to think about, indeed.