Divergences Abound: The Fats Are Getting Skinnier

The $SPY closed up for an 8th consecutive session, extending gains for November to a ribald +4.5%. On the other hand, in the housing tenements of the $IWM — it sank lower for a 3rd consecutive session — reducing its gains for the month to +3.25%.

This is not unusual and has been the custom for some time now — with the S&P 500 up 14% for the year and the Russell 2000 down 2.5%. The reason being: companies in the S&P are well established money makers — houses of refined repute, whereas the Russell is bedraggled by small capped money losers accelerating into perdition with every FOMC hike.

The easy trade is to remain long free cash flow winners against the losers and continue to be merry and happy, as the world burns around you.

I closed the session down 18bps and barely felt the need to really trade today. It was my day off.

I did close the session with a 15% weighted position against the small caps paired wonderfully with an array of hand selected longs, such as $LLY.

The story for both $NVO and $LLY is as follows: people are fat fucks and cannot stop eating, so they are attracted to expensive drugs that PARALYZE their stomachs to decrease the burden of hunger. Their stomachs stop working and food sits idle inside them for weeks, enabling the fats to lose some weight due to lack of appetite. This has caused the share prices of $LLY and $NVO to rather ironically expand in a post COVID world — big pharma at it again with new schemes to cajole the money out from the purses of the catamite class and into theirs.