- the source for market opinions


March 7, 2020 | Trading Desk Notes March 7, 2020

Victor Adair, author of The Trading Desk Notes, began trading penny mining shares while attending the University of Victoria in 1970. He worked in the mining business in Canada and the Western United States for the next several years and also founded a precious metals trading company in 1974. He became a commodity broker in 1977 and a stock broker in 1978. Between 1977 and his retirement from the brokerage business in 2020 Victor held a number of trading, analytical and senior management roles in Canada and the USA. Victor started writing market analysis in the late 1970’s and became a widely followed currency analyst in 1983. He started doing frequent media interviews in the early 1980’s and started speaking at financial conferences in the 1990’s. He actively trades his own accounts from The Trading Desk on Vancouver Island. His personal website is

At market extremes you are trading nothing but psychology. So…is it time to sell panic? Or is the hysteria just beginning?  What’s your time frame? What’s your pain threshold? Volatility has exploded as liquidity has vanished. Bid/offer spreads are wide but not deep. Credit spreads are widening. The 10 year UST yield has dropped from ~1.6% to ~0.8% in just 12 trading sessions. In the same time frame gold is up ~$100, WTI is down ~$12 (a 4 year low,) the S+P is down ~500 points and the US Dollar Index has tumbled from a 2 year high to a 1 year low. The CNN Fear/Greed barometer is at 5.

My view has been that the virus was a catalyst for an accident waiting to happen...people had been rewarded for taking on risk…reaching for yield…so they took on more risk…and then risk happen WAY faster than nearly anybody had expected.

S+P futures were at All Time Highs 12 trading sessions ago. In 7 trading sessions the spooz dropped >16%…recovered ~50% of that drop in a couple of days and then turned lower again.


There’s an Island Top in MSFT that may symbolize the “topping out” of the 10 year stock market rally.


10 year Treasury futures have soared in price as yields have tumbled.


The US Dollar Index hit a 6 month low at the end of 2019...then rallied to a 2 year high in just 6 weeks only to turn sharply lower at exactly the same time as the US stock market began to fall from All Time Highs.


WTI made a spike high above $65 on US/Iran tensions in early January but has tumbled ~37% since then on worries that the virus will slash global demand…on the inability of OPEC+ to agree on production cutbacks…and on liquidation of huge long spec positions.


Gold rallied to a new 7 year high as interest rates, the stock market and the USD fell.


The Canadian Dollar fell to a 6 month low this week when the Bank of Canada surprised the market with a 50bps cut…and as crude oil tumbled to a 4 year low.


My short term trading: I started the week with a deep ITM bearish S+P put spread. I still hold that. I also still own a bearish gold put spread. The huge volatility ramp across markets this week increased the gold option values even as gold rallied. I may close the spread at a small loss or leg out of it. I was short Yen over the weekend as a play on stocks continuing the previous Friday rally. I covered that position for a small loss Tuesday. I bought MEX at the end of the week as a play on panic subsiding. MEX has tumbled with the stock market the past 2 weeks but Mexico has a huge yield advantage over the USA and if panic subsides I’d expect to see capital flow to Mexico.


I sold panic a few times this week...looking for stocks to bounce and bonds to fall. I used very tight stops and ducked several large bullets but had small net losses on the week. My main mantra is to preserve capital. Live to trade another day. Selling very high volatility was tempting…but it was difficult to manage risk on the trades…and managing the risks on my trades definitely overrides any fantasies I have about having a great crystal ball!

My son Drew Zimmerman and I use the futures market to trade currencies, metals, interest rates, stock indices, energy and other commodities. Please give us a call or send us an email if you’d like to know more about trading futures.

Victor Adair

SVP and Derivatives Portfolio Manager

PI Financial Corp


PI Financial Corp. is a Member of the Canadian Investor Protection Fund. The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or the authorize someone else to trade for you, you should be aware of the following. If you purchase a commodity option you may sustain a total loss of the premium and of all transaction costs. If you purchase or sell a commodity futures contract or sell a commodity option or engage in off-exchange foreign currency trading you may sustain a total loss of the initial margin funds or security deposit and any additional fund that you deposit with your broker to establish or maintain your position. You may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position. If you do not provide the requested funds within the prescribe time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult to impossible to liquidate a position. This is intended for distribution in those jurisdictions where PI Financial Corp. is registered as an advisor or a dealer in securities and/or futures and options. Any distribution or dissemination of this in any other jurisdiction is strictly prohibited. Past performance is not necessarily indicative of future results.

STAY INFORMED! Receive our Weekly Recap of thought provoking articles, podcasts, and radio delivered to your inbox for FREE! Sign up here for the Weekly Recap.

March 7th, 2020

Posted In: Victor Adair Blog

Previous: «

Post a Comment:

Your email address will not be published. Required fields are marked *

All Comments are moderated before appearing on the site


This site uses Akismet to reduce spam. Learn how your comment data is processed.