YouSaid · the spoken record

Tom Thornton

lines on the record: 83
first: 2022-02-17
most recent: 2022-02-17
sittings or episodes: 1
sources: podcast

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“Yeah, yeah. An example, I guess, is I'm guessing that some cruise lines in March of 2020, they hit a DeMarc bottom, but they did not bottom because it was this very strong trend. Yes. So oil has hit a demarc high, and today is sort of its first leg down. Is it going to be a first leg down in a much longer pattern? Obviously, very hard to tell. Or is it once a DeMarc pattern breaks, can it return to its longer form?”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“You get a new number if you make a two day high over the high of two days previous. And it can interrupt, actually. So if it goes up and it can go sideways, but when it has that parameter met, then you get another countdown number. When you get to 13, that is the Big number for an exhaustion, and then give or take, let's say 10 to 12 days or bars, depending on time frame, you should see a price reaction on the other side. If it doesn't happen, which happens to, and it tells you something very important, is that the trend is very, very strong, and it can continue. Now, the S&P last year had lots of daily thirteens and you had little 3%, four percent pullbacks. were bought”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, there's two components of the DeMarc sequential countdown, and the first one is the setup, and those are the green numbers. If you look at my charts that I post on Twitter, you'll see them all the time. The first, the setup countdown or the setup count has to be nine consecutive closes higher or lower. So let's just say higher than four previous bars. And then the sequential, if the nine completes, and like let's say that sequence of nine bars does not complete and it interrupts that it's canceled so you don't see the green counter anymore. But if you do get the nine and that happens all the time, the sequential will continue the trend. Those are the red counts and the parameters are two.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“So right now we have a couple problems with supply chains. The reopening is causing a big amount of demand. We're reliant on the Mideast, Russia, foreign of the OPEC Plus nations, which is not a good place to be. Biden really doesn't have a very good plan to control it. Now, market sentiment on crude hit 92% for the last two days. And yesterday we had some DeMarc sequential countdown 13s on the daily charts on not only WTI, but we had it on Brent. We had it on the gasoline futures. And I just took off my energy ET. of the trades that I had on as long and I was a you know Perfect timing But, you know, every once in a while I'll get one.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“First of all, I went back. I started to get really bullish on crude and energy a month before Biden was elected. And the reason I think I was even talking to you way back when about it because I knew that their agenda was to hurt the energy companies, whether the shale companies or the big drillers that they would limit the amount of drilling in the US would put pressure on the price because supply and demand. And the funny part is that when Trump was elected, I heard all these people saying, oh, it's all Trump's buddies at Exxon and they're going to get rich. And it was a bear market for the energy markets because there was more supply.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“And I think that you need to remain rather nimble with where you are with your put spreads. I don't go out. Generally what I will do is I will look for something a month to two months out. I'll look 2% down for the first strike and then 10% lower for the second strike capping my gains if we get there. Those put spreads I did in March of or February of 2020 they went right through the lower strike of the put spread and you know I could have made a lot more but you know they worked as advertised”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I've had some conversations with Mike Green and sobering thought. The concern I have is that all those people that put money into the market last year are going to be future sellers. And nothing motivates sellers more than lower prices. And that could be a cascading type effect. I have put spreads in the market. I'm short stuff in the market. I'm long stuff in the market.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“So, I don't think the Fed's really that concerned about where the stock market goes. Probably in the 3000s, the Fed might start commenting about it. I'm not sure they can start QE again or cut rates or we'll have to But the Fed's going to be tightening rates for a while. That's my view”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“CPI and PPI right before the Fed. So the 50 basis point consents will become consensus of what the Fed's going to do. And they're behind the curve. They know it. And they have a mandate. I mean, Biden said in his prep big press conference he did last month that inflation was top of his list and he passed the buck to Jerome Powell and said You guys deal with it. It's on you. And I joked last week saying that when Powell was renominated, Biden gave him a little wink and said, you know, get inflation under control before the midterms. But I don't think they're going to get inflation completely under control. It's hard to put the genie back in the bottle once it's out. And Getting inflation under control, it actually hurts the economy and the stock market and part of getting inflation under control is to work the stock market lower.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“In my opinion, three to four times. And I think that the big concern in the market is if they hike in March 50 basis points. And today's PPI number was red hot. It was red hot like the last CPI report. And that, I think we're going to see another really strong.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“The funny thing is everybody's panicked and there was also data in there showing that their biggest concern was too tight of monetary policy. Now we're still doing QE as we speak and we haven't seen the Fed hike once yet. And they're concerned about it. I always laugh when I hear someone on financial TV saying, oh, policy mistake, they're worried about a policy mistake at zero rates with QE at the markets not that far off of all-time highs with valuations that are historically very high. Boy, I'm really Mr. Positive here today, aren't I? But the bottom line is that they will most likely hike”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“And that's partly the earnings weren't necessarily awful, but the reaction was awful. And that, I think, is generally because fund managers are loaded up to their gills with bank stocks. And so there was just nobody left to buy them. They're not that short. And that's why they get crowded and we try to track that. It's hard to move them. I mean, the tech names were crowded and also sold off pretty hard. And you saw outsized reactions in names like DocuSign, Adobe, Autodesk, others that really hit it hard. I mean, and Facebook, obviously.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“And institutional firms were selling at the highest rate ever technology stocks. And they were degrossing their books by getting rid of tech stuff. Now, tech is actually on the Bank of America fund managers survey today. Tech is at one of the lowest levels as far as exposure. And tech was always a very crowded place. When the market does finally find some footing and can bounce, tech's going to, there's a lot of tech that's going to bounce real hard. And I think it's going to catch people that are comfortably short, that have been short these names are going to get caught out. Look at the way the banks, banks report first, and when they reported it wasn't a very good reaction by the market.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“20 to 30 percent after their earnings, but they did. And that was basically catching people out that were set up real long hiding in Facebook. Oh, it's cheap, blah, blah, blah. But that's what happens when there's surprises. The stocks go down a whole lot more. And one other thing that we track a lot and have been tracking a lot more recently is the market short interest and excessive call buying or excessive put buying. And there were calls being bought on Facebook ahead of the earnings. And usually you want to fade those types of signals. And at the lows, you see a lot of put buying and then you see this bounce and that's basically a put squeeze of those puts are getting unwound. If you get surprised, you're going to get an outsized reaction. These big hedge funds.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“When you have a market correction at the start of a market correction, the stuff that gets thrown overboard first is the junkier type stuff. And that's what we saw. We saw a lot of junkie stuff get thrown over. All the meme stocks are gone. The spacks are decimated. A lot of tech names that just didn't have any earnings. I'm not bagging on Kathy Wood, but a lot of her stuff got thrown overboard. And then what happens is people hide out in the safe stuff and then earnings start to get a little trickier, comps get harder, and then they have to let go of those. I think Facebook's a pretty good example. Nobody really expected Facebook to drop.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“I think there's risk pretty evenly spread out and I can look at the NASDAQ. I know a lot of people, I've watched a lot of people try and short the triple Qs and the Nasdaq Futures, but you're shorting Apple, Amazon, Microsoft, Google, and good luck. It's real tough. But it's not impossible. And I do think that there's risk with those companies to go a little lower. And the thing is,”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“It's not there yet. And it's, you know, we've had this bounce. And one of the things that happened, I think the S&P Bullish sentiment got just under 20% at the lows, and then, which is not super oversold, but it bounced and it moved up to just under 50%. And then it failed at that level. I also use moving averages on the market sentiment, and those tend to work pretty well too to just establish a trend. And the trend right now with the 20-day moving average of the S&P bullish sentiment is pointed down.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, in March 23rd. 2020, the bullish sentiment got to, I think, 3% bulls. Usually when you get under 10% or above 90%, those are extreme readings. Generally, you're not going to see those readings last at those extremes for long. The thing is, I used to mark indicators, which is an exhaustion indicator, and they basically work as a trigger for me. So in March of 2020, we had tons of DeMarc exhaustion sequential 13 buy countdowns. And I put out notes saying to everybody, just buy every single thing you can. I covered all my shorts and went mega long, and people thought like I was losing my mind. But as it turned out, those indicators worked and they've worked well at extreme.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“You know, it's going to be a longer period than people hope. And the implications of when the Fed tightens, it's going to hurt profit margins. It's going to hurt really operating costs for a lot of companies that use leverage. And there are a lot of them out there that are zombie companies that just are refying their debt over and over. And if the cost of that refi goes up, which it will. Going to have some problems”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“So the majority of people surveyed were bullish. And now it's been below 50%. So the majority of people are bearish. And that's a real change of market sentiment. And market sentiment is not something that, and this is something people get wrong, it's not a trigger. So if it gets low, it doesn't mean you got to buy or if it gets real high. It doesn't mean you got to buy or sell. The bottom line is market sentiment is a condition and it can stay overbought or oversold for a period of time. And if we're going into a bear market and certainly the Fed tightening most likely very aggressively, I think”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Is sort of my secret sauce. I do it on the opposite side too. When I have downside exhaustion signals, I see put buying or heavy shorting. I can say, okay, I think this one has potential to move up. And there are some of those out there. We were looking at square and PayPal the other day. Those are just those have been mauled. And rightfully so because I think their earnings have weakened. They got a little too deep into crypto and that didn't really pay off to be very sustainable for them. There's market sentiment is starting to turn as well. And I use the daily sentiment index. I've used it for years. We have charts on our site. And it held above 50%.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Perfect setup for me. I like to look for stocks that have had a nice run higher. They get a demarc exhaustion signal on the highs. There's a lot of call buying and the short interest has dropped. So you've had a big squeeze. You've got an exhaustion. And then you can see most of the time a pullback. And that is really important. A lot of people will buy puts on the lows and by calls on the highs. And I can show it every single day of what people do wrong. And that to me”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“I follow them, but they're not really in my universe of what I do. The problem with a lot of those is hard to short them because the borough is expensive. The option volatility is really high. For me, it's just more fun to just watch what happens with a lot of these stocks. It's hard to short the obvious. And that, to me, is something that people do way, way too often I think that I like to look for.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“So that helped bring some conviction, and if we were wrong, I figured we probably had a month to two months of a little pain. Could have been a lot, but it wasn't, so it worked out.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Our office was a football field away from front point and those guys were in the big short. We weren't, but we were basically short maybe a little bit more than they were at the same trades and it worked and it was hard. It was really hard. Our financials guys were very nervous. Even being right, it was really hard. In March, and actually it started around February and March, we started covering these financials, and there was still a little bit more downside. But I remember when they said, you know, let's start buying Bank of America. And it was $4. And we were buying all these, and I was like, wow, this is, you know, really significant. But we also had a lot of DeMarc. I count on thirteen's on daily weekly and monthly time frames which was all in syn”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“But let's say go back to 1929. 1929, you had this big crash, and then it went down for three years after, actually two and a half. But there were 10% spikes along the way. So those were actionable. So that happened also in 2000. And you had some very meaningful spikes in 2008, 2009, that the problem is it's not that easy just to short stock or to be short with puts or whatever. It's really hard because you get caught out with these face ripper rallies. And so you have to be nimble. And I've worked for hedge funds and we were really successful in 2008. We were short of billion dollars of financials and CDX and all the stuff.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“I feel pretty strong that the SMP and the Nasdaq should continue lower. Actually, all the US markets should continue lower. And it's partly because of the Fed. You could also have, you know, you have noise with the Russia-Ukraine situation. But I think longer term, I think we're going to see... Lower levels, and in bare markets if this is a bear market and can't really call it a bear market until it is, I guess, acts like one.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“So we're recording this on Tuesday, February 15th. You think we're in the middle of a corrective bounce, stocks are up today, but you think long term that you're quite bearish. And Tom, can you just explain for the viewers, why are you bearish? What's your sort of structural view?”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Corrective bounce, it'll be a lower wave high. And then if we break the recent lows, then I think we're going to really see deeper levels, probably a three handle on the S&P.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“One thing, if you look at the two-year yield and the Fed funds rate overlaid, the Fed is clearly behind the curve and should have started raising rates. Probably last September, and they overstimulated the markets. I think right now the equity markets are digesting. And the problem that I see is the average stock in the market is down really significantly. I mean, we're talking maybe 40% down on average. And you have these big mega caps and everybody knows that they have such big weightings and they're safe and they make tons of money and they have great buybacks. And so that's been a hiding place. And if those stocks really gave up, then we could see a catchdown to those other stocks, the average stock that's down a lot more. So my big thesis right now is that we caught the low, the first move down, and this has been a wave two tight.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and the anticipation of rate hikes is already priced into the Fed funds, futures markets, the euro dollar markets. And you've seen that the two-year yield, for example, has been bumping up at very high levels. I think one person said that there's one day over day change of 25 basis points. That was the biggest sell-off since June 2009. To what degree, Tom, do you think that that turmoil has impacted the equity market? I know you follow stocks very closely. What sort of volatility are you seeing there?”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Inflation and it's just been game on and earnings have been pretty good, so you have been able to see those people work. And there's been huge, huge inflows in the last year. In 2021, as you know, there were so many inflows were more than 20 years combined in just one year. And so there was just a lot of capital chasing stuff. And now it's changed because now we have an inflation problem. And the Fed is now backing off of QE and will soon be raising rates.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT
“Investors have been rewarded to buy every single dip and they've just been so anxious to buy every single dip so they've been very shallow. And you've had the Fed stimulating the economy with QE and keeping rates at zero. And it's never easy for a central bank to raise rates. It's a lot more fun to cut rates. You want to be a central banker when you're cutting rates. Everybody loves you. They write books about you and you write your memoirs and you sell million copies. But it's hard when you have to pull away the punch bowl and the liquidity and you have to control.”
2022-02-17 · Forward Guidance · Is a Bear Market Imminent? | Tom Thornton · IDENTIFIED FROM THE TRANSCRIPT