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September 19, 2020 | Trading Desk Notes September 19, 2020

Massive stimulus from governments and Central Banks created a powerful “risk on” market psychology that drove equities and commodities higher and the USD lower over the past few months. We think this “risk on” market psychology in the process of reversing and we’ve been trading accordingly. Mega cap tech had a spectacular run in this “risk […]

September 12, 2020 | Trading Desk Notes September 12, 2020

The big drivers of market psychology year-to-date have been, 1) the virus (and its anticipated knock on effects) followed by, 2) massive stimulus from Central Banks and governments. The virus psychology drove equities and commodities down hard…while driving bonds and the USD higher…whereas the stimulus has had the reverse effect on equities, commodities and the USD. […]

September 5, 2020 | Trading Desk Notes September 5 ,2020

The Spuz and Nasdaq 100 raced to All Time Highs early this week…on surging volatility…as word circulated that a whale (apparently Softbank) was buying billions worth of call options…it wasn’t just the Retail Army trading in their pajamas. The Put/Call ratio plunged to new lows…the CNN Fear/Greed index hit full-on greed…and then the fever broke […]

August 29, 2020 | Trading Desk Notes August 29 ,2020

Since the February All Time Highs we’ve had the shortest bear market ever…followed by the fastest recovery to a new record high in over 80 years. We’re very lightly positioned at the end of the week…thinking that September may bring some serious reversals across markets. Don’t be short volatility!   The Nasdaq 100 has rallied […]

August 22, 2020 | Trading Desk Notes August 22, 2020

The news that “Buffet Buys Barrick Shares” spurred gold to rally more than $70 from last week’s close to Tuesday’s highs…the US Dollar Index falling to new 2 year lows also buoyed gold. We shorted gold on that rally and bought the US Dollar against the Euro currency.   We covered a short gold position last […]

August 15, 2020 | Trading Desk Notes August 15 ,2020

Question: How many times have we seen markets get “silly” during the “dog days” of August…only to get hit with “reality” immediately after the Labor Day weekend? Answer: More than enough times to make us wonder what qualifies for “silly” these days…knowing full well that “silly” is usually hiding in plain sight…and the clues (at […]

August 8, 2020 | Trading Desk Notes August 8 ,2020

On June 20, 2020 we wrote, “Markets currently seem to be highly correlated into a simple “risk on / risk off” dichotomy…with the emini S+P futures leading the way while other markets follow.” Some people refer to it as, “All One Market,” and from a macro perspective it’s been a “risk on” market since mid-June as: […]

August 1, 2020 | Trading Desk Notes August 1, 2020

The US Dollar Index (USDX) had its worst month in a decade in July…falling >5% to a 2 year low. USDX has dropped >8% from mid-May when Macron/Merkel launched their plan to create a jointly guaranteed recovery fund for Europe…which launched a sizzling Euro rally on thoughts that this might be a major step towards […]

July 25, 2020 | Trading Desk Notes July 25, 2020

We look for trading opportunities in exchange listed futures and options. Our time frame is a few days to a few weeks. We believe that net trading profits over time come more from risk management than from trade selection…but a good trade selection process is important. To that end we develop “fundamental” market views and then […]

July 18, 2020 | Trading Desk Notes July 18, 2020

You have to ask yourself, “What are we trading these days?” 50 million Americans have applied for first time jobless benefits since the  lockdowns began and the Nasdaq 100 has rallied >60% from the March lows to this week’s All Time Highs. For most of my trading life I’ve made a point of knowing when economic […]

July 11, 2020 | Trading Desk Notes July 11, 2020

Our base case has been that all of the central bank and government stimulus would not prevent pervasive global demand destruction as the virus continued to spread…that the stimulus inspired “risk on” trade in financial markets would “roll over” once the divergence between the real economy and the financial markets got too wide. However…as traders we […]

June 27, 2020 | Trading Desk Notes June 27, 2020

I trade futures and options for my own account. My initial time horizon for a trade is usually a few days to a few weeks. Sometimes, if my view of the market is working I will maintain a position for months. I believe net profits over time come from disciplined risk management…not from having a great […]

June 20, 2020 | Trading Desk Notes June 20, 2020

Markets currently seem to be highly correlated into a simple “risk on / risk off” dichotomy…with the emini S+P futures leading the way while other markets follow. If the spuz is bid then WTI catches a bid while the USD and bonds are offered…and vice versa. The tricky thing with trading off inter-market correlations is […]

June 13, 2020 | Trading Desk Notes June 13, 2020

I thought the stock market’s huge rally off the March lows was a bear market rally because of the huge dis-connect with the real economy. I thought demand destruction was so powerful that stimulus from the Fed and the government was only going to keep the economy from falling into a depression…not turn it around. I […]

June 6, 2020 | Trading Desk Notes June 6, 2020

A Key Turn Date occurs when a number of different markets all reverse direction at the same  time…giving us a very valuable window into market psychology. At the risk of being scorned by psychologists I’d say that a KTD may be an example of synchronicity in the markets…when “meaningful coincidences” are a  manifestation of some […]

May 30, 2020 | Trading Desk Notes May 30, 2020

My bias is that the 20% rally in the S+P from October 2019 to February 2020 may have been a “blow-off top” to a 10 year bull market. (I see Tesla running from ~$250 to ~$950 as the poster child for the Irrational Exuberance of that time.) The virus set off a “tumbling dominos” decline from the […]

May 23, 2020 | Trading Desk Notes May 23, 2020

I’ve been trading small size with tight stops. Choppy price action keeps my conviction level low. My bias is that demand destruction has been incredible…with a good chance that it gets worse before it gets better…so I think this is bear market rally…but I have to respect the fact that risk assets won’t break down. This […]

May 16, 2020 | Trading Desk Notes May 16, 2020

The Nasdaq 100 surged 9% into Monday’s highs on the back of 6 consecutive up days…but then it wobbled a bit…maybe due to rising US/China tensions…maybe due to fatigue after “too far / too fast”…maybe due to the wake up calls from Druckenmiller and others…or maybe it was just the “pause that refreshes” and the […]

May 9, 2020 | Trading Desk Notes May 9, 2020

Stock market indices rallied this week…lead by the Nasdaq index which is now up ~4% YTD after being down ~25% YTD at the March lows…volatility metrics keep falling and the open question is, “How will the “re-opening” play out?”     Stock market investors seem to be anticipating that the “re-opening” will play out just fine. Massive […]

May 2, 2020 | Trading Desk Notes May 2, 2020

Overextended markets are especially vulnerable to exogenous shocks. The stock market was especially vulnerable to the virus shock in February 2020 after a 45% rally off the Christmas 2018 lows to All Time Highs…with half those gains coming in just the last 5 months as millions of new  “commission free” retail accounts piled into the market […]

April 25, 2020 | Trading Desk Notes April 25, 2020

Massive monetary and fiscal stimulus in March and April will “counter” the deflationary surge to some extent…but it’s not a one-for-one “offset”…the deflationary impulse will be sustained…will be pervasive and enduring. For the past 20 years we’ve been trained to believe that stimulus can “turn things around”…so equity speculators have been BTD lately…but bonds, commodities […]

April 18, 2020 | Trading Desk Notes April 18, 2020

Nasdaq 100 futures went green YTD this week…up ~35% from their March 23rd “max panic” lows…while the Russell 2000 is still down ~25% YTD even though it rallied ~30% from its March lows. This is a classic inter-market relationship…tech stocks (and especially the Big Names) have blown away small caps since the “V” shaped recovery began […]

April 11, 2020 | Trading Desk Notes April 11, 2020

It’s all about the Fed. If you wonder why we’re seeing such a HUGE divergence the past 3 weeks between the economy and where investor psychology has taken the market…just remember…the Fed said they would do whatever it takes…did you think they were bluffing? They were back in this morning with another $2 Trillion program to […]

April 4, 2020 | Trading Desk Notes April 4, 2020

Has the stock market bottomed? I don’t know…but I know why you’re asking. But…but the major indices fell so far so fast…they threw the baby out with the bathwater. This has got to be a once-in-a-lifetime buying opportunity!  Maybe. Markets were over-leveraged / priced for perfection in February and then the virus came along and set the dominos […]

March 28, 2020 | Trading Desk Notes March 28, 2020

When I get a trade idea my first question is, “How much of this idea is already in the market?” For instance, if I consider that the “virus news” could get worse next week I ask myself, “To what degree have the people who move markets already taken this idea into account? To what degree does […]

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