Facts to consider in August

Hello friends. I made a post in July about some facts to consider and tried not to express much of a bias into that post. We can do the same here, to give traders a bird's eye view of what is to come this month whether they are bulls, bears, or neither. We will try to include as many sources as possible so traders can see for themselves and follow the golden rule of "don't trust, verify".

Today we have seen that CNN's famous Fear and Greed index crossed back into neutral territory for the first time since April 8th. This is important since it means the argument that traders are "too bearish for prices to go down" is no longer valid. However, you must also consider that the argument traders are "too bullish for prices to go up" is invalid too. Traders are not bullish, and they are not bearish. The sentiment is neutral, overall. edition.cnn.com/markets/fear-and-greed

Insider traders have been ramping up their selling, going from only 58 sales on July 28th to 156 sales on August 2nd. However they have also increased their purchases by a smaller amount from 38 on August 28th to 76 on August 2nd. When we see insiders selling more than usual it tends to be a bearish signal. openinsider.com/charts

We are now in a recession, as predicted by Polymarket. Risk assets tend to perform badly during a recession, especially assets further out on the risk spectrum such as profitless growth stocks and cryptos.

The month of June's CPI release on August 10th is set to be a suprisingly low number, with Kalshi predicting a print of only 0.3%. This would bring down the YoY number, despite slightly increasing the inflation overall. Last month every time we saw a major news item, it led to a move against the direction an observer might naturally be inclined to expect. The hot CPI print saw prices going higher, and so did the recession announcement. Both of these were "bad news" but the price turned them into "good news" because they at least signaled certainty, which has an intrinsic premium of sorts. It's very possible although certainly not guaranteed that the low CPI print coming will be seen as "Good news is bad news" in the same way that recent news was seen as "Bad news is good news". kalshi.com/events/CPI-22JUL/markets/CPI-22JUL-T0.2

Commodity prices continue to fall, and gasoline futures is now down by 33% from the high and is leading crude oil to the downside. As this deflation begins to echo through the system, it makes sense that almost all commodities will become cheaper over the following months, simply because of the fact that gasoline is used in the production of almost every commodity I can think of. These things don't price in instantly, because the physical commodity market runs more slowly where supply has to be physically moved around and some producers may still be using their last batch up which would have been purchased at much higher prices than the current market rate.

With the earnings season pushing onwards, we will be having some big names like Alibaba report earnings this week. The numbers reported by large companies tend to lead the rest of the market, since it's seen by market participants as "All's well when Apple's well" in a sense.

It's hard to mute our bearish bias, and it may have seeped through here a bit but we hope that the information presented will give all traders reading a little bit of that deeply precious alpha we all need. Thanks for playing.