Thread by @TradetheMatrix1

End of the week recap for cycle flows in #smallcaps. Regardless of $COSM action the overall message is still quite clear, weakness incorporated.

Thread:

1.

Big picture:
Strong cycle in August followed by weak cycles more or less into December followed by strong cycle that exhausted very quickly. One prior short lived strong cycle in Sept also ended the same.

Longer lasting weak cycles combined with short lived strong cycles.

2.

For example ADFs showed up very early into this strong cycle, just three days into it heavy ADF mode.
Same as in last one. All tickers that tried to take the lead position (AMAM etc) had no d2 or d3 followthroughs. Early exhaustion.

3.

Using macro context it all makes sense and could be diagnosed ahead. We will see more of that next year highly likely. Figure out what this means for you:

4.

Use last 5 months as framework on how you will adjust your approach to be doing well trough market as seen over this period. Don't hope for change because it's not very likely to happen. Adjust, use recent behaviors to adjust to them. Especially if you are long biased.

5.

There is some chance the flows still head with some strength next week due to COSM but the prints were already given out on weakness this week.

6.

If you are used to getting tied to positions on longs you need to figure out how to go mercenary mode. Rug pulls of strong cycles are the most bearish indication you could have as they signal less ability for MMs to sustain multiday runners going forward. Which impacts you.

7.

Remember we see all of that while we haven't even stepped into recession properly. All that is yet to come. Which means flows will more likely still to step down rather than vice versa. Adjusting to weak cycle edges needed, which means less Rs opportunities.

8.

This is view for next 6 months as likely resolution and current behavior is aligned as confirmation. As said the only thing to disqualify it in my view is a miracle of QE coming at you from your fav central bank. Liquidity influx mode.

9.