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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 […]

March 21, 2020 | Trading Desk Notes March 20, 2020

Leverage is being punished these days…as recently as last month it was being celebrated. During a decade of low interest rates and easy money folks levered up and reached for yield. That worked out great so they did more…but apparently they overdid it…so now the “liquidation” phase has kicked in and the talk is of counterparty […]

March 14, 2020 | Trading Desk Notes March 14, 2020

Volatility surged higher across markets this week…prices changed with astonishing speed…bid/offer spreads were ridiculous…credit spreads widened with a vengeance and depth-of-markets got scary thin. Global stock market cap tumbled >$16 Trillion in 3 weeks…more than China’s annual GDP.   The US Dollar soared this week as stock markets tumbled. The CRB commodity index fell to a […]

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

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% […]

February 29, 2020 | Trading Desk Notes February 29, 2020

The stock market surged to All Time Highs the first 2 weeks of February…ignoring red flags from the bond market, the US Dollar and gold…but the day of reckoning finally arrived and the market crashed with astonishing speed and determination. Waves of selling triggered more selling and prices tumbled like dominos.   Volatility ripped higher…a […]

February 22, 2020 | Trading Desk Notes February 22, 2020

Starting January 24th the S+P futures closed red for 3 consecutive Fridays…fearing bad virus headlines over the weekend…but this past Valentines Friday (ahead of a 3 day weekend) the S+P futures closed green…not exactly an “all clear” signal but at least “an indication” that the market was pricing less fear. That sanguine S+P pricing revealed more […]

February 15, 2020 | Trading Desk Notes February 15, 2020

Commodities have been hammered since the virus became front page news…but bonds, gold, the US Dollar and stocks have all rallied…which begs the question, “Are markets anticipating a global economic slowdown exacerbated by the virus…or are they looking past that and anticipating massive fiscal and monetary stimulus?” Fears of a dramatic fall in Chinese demand […]

February 8, 2020 | Trading Desk Notes – February 8, 2020

Emotional reactions to Coronavirus headlines churned price action across markets the past 2 weeks. This week, in lieu of my usual Trading Desk Notes I’ve attached the Power Point – and my opening remarks – that I will be presenting at the World Outlook Financial Conference February 7th in Vancouver, British Columbia.  https://mikesmoneytalks.ca/world-outlook-conference-2020/  The theme of […]

February 1, 2020 | Trading Desk Notes February 1, 2020

Market psychology turned decisively “risk off” this week with many global stock indices hitting YTD lows…the “looming recession” idea is back in vogue as analysts factor in the knock on effects from the coronavirus hitting an already weak global economy.   Last August the major American stock indices broke down from ATH when the “looming recession” idea […]

January 25, 2020 | Trading Desk Notes January 25, 2020

The major North American stock indices hit ATHs this week…initially shrugging off virus concerns…but when the virus headlines became increasingly scary ahead of the weekend stocks and commodities fell while bonds, bullion, the US Dollar and the Japanese Yen rallied.   Given the tremendous run in stock indices over the past few months this week’s correction […]

January 18, 2020 | Trading Desk Notes January 18, 2020

The major stock indices continued their relentless rally this week…and I got myself into a frustrating trader’s dilemma. It’s funny now…and I’m sure any traders reading this will be thinking, “Yep…been there…done that,” but it sure wasn’t funny while it was happening! I’ve had a “bias” that stock indices were “stretched” and I’ve looked for opportunities […]

January 11, 2020 | Trading Desk Notes January 11, 2020

Dramatic market price action on Tuesday evening Jan 7/2020 created important Pivot points across a number of key markets…especially gold. Look at it this way…gold rallied ~$125 in 9 days leading up to and including Jan 7…it rallied ~$40 in the last 1 ½ hours to hit a 6 ½ year high at $1,613 (basis Feb […]

January 4, 2020 | Trading Desk Notes January 4, 2020

Can we “trust” price action during low-volume holiday markets? That’s a tricky question…my best answer is that low-volume holiday markets are usually less “valuable” than regular markets in terms of “validating” price action. Look at it the other way round…most traders believe that price action is much more significant if it is accompanied by HIGH volume. […]

December 28, 2019 | Trading Desk Notes December 28, 2019

The most important message from the financial markets in 2019 was, “Don’t Fight The Fed.” The 180 degree turn in Federal Reserve policy…the Powell Pivot…caused markets to realized that it was, once again, “All About The Central Banks.” In December 2018 the Fed raised interest rates and indicated that they expected to be raising rates in 2019…but […]

December 21, 2019 | Trading Desk Notes December 21, 2019

The benchmark North American stock indices keep printing new ATH…while complacency reigns even as the CNN Fear & Greed index is flashing extreme greed. Volatility is ultra-low across all markets, the put/call ratio is at a 5 year low and credit spreads are tight. People are reaching for yield and have no interest in buying downside […]

December 14, 2019 | Trading Desk Notes December 14, 2019

We saw very choppy short term price action this week in stocks, bonds, currencies, gold, and crude oil as markets were rocked by trade deal headlines, the UK vote, the impeachment process, the Fed and ECB meetings…not to mention the endless barrage of Trump tweets! The apparent “de-escalation” of the US/China trade war was seen as […]

December 7, 2019 | Trading Desk Notes December 7, 2019

Stocks, bonds, currencies, crude oil and metals were all rocked this week as sentiment swung dramatically from “risk off” to “risk on.” The benchmark American stock indices traded at ATHs during the low-volume Thanksgiving week…hit new ATHs Sunday afternoon as this week began…but then a flurry of trade headlines sparked a wave of selling that took […]

November 30, 2019 | Trading Desk Notes November 30, 2019

The S+P 500 index hit new ATHs again this week…closing higher 7 of the last 8 weeks…rising ~10% from the early October lows. YTD gains are ~25%. David Rosenberg reports that 95% of the total return YTD has come from P/E multiple expansion, with dividends accounting for 8% while actual earnings account for a negative […]

November 23, 2019 | Trading Desk Notes November 23, 2019

The major American stock indices hit new ATHs Tuesday but turned modestly lower as trade optimism faltered. Bullish momentum has been inspired by easy monetary policy, FOMO and TINA…with little regard for WHY monetary policy has been easy. Investors have been handsomely rewarded for buying dips. Option volatility and put/call ratios signify complacency…the CNN Fear/Greed index […]

November 16, 2019 | Trading Desk Notes November 16, 2019

The runaway bull market in major stock indices continued this week with lots of new ATHs (notably Ex China and EEM…and Trannies and Russell.) I’ve been writing here for the past month that “if” the major indices made new ATHs a lot of people would be amazed and some cautious money managers would be “forced” to […]

November 9, 2019 | Trading Desk Notes November 9, 2019

My best performing trades YTD have come from recognizing that September 3, 2019 was a HUGELY important inflection point across a number of KEY markets. The reversal in the interest rate markets on September 3rd was the epicenter of the inflection point…but the range of markets that reversed on or around that day is truly impressive. […]

November 2, 2019 | Trading Desk Notes for November 2, 2019

The Bank of Canada and the Federal Reserve both roiled markets Wednesday…even though their initial communications were exactly as expected. The BoC left interest rates unchanged but Stephen Poloz made it clear that given all the political and economic uncertainty in the world, especially outside Canada, that it wouldn’t take much for the Bank to […]

October 26, 2019 | Trading Desk Notes October 26, 2019

The S+P 500 index hit a new ATH today…up ~ 6% from Oct 3 lows…up ~11% from mid-summer lows…up ~29% from last December lows. We’re in the heart of quarterly earnings season…companies that beat are aggressively bid…companies that miss are clobbered. Markets are embracing risk…implied vol is back to mid-summer lows…even as global economic growth […]

October 19, 2019 | Trading Desk Notes October 19, 2019

Currency market trends often go WAY further than you can imagine…they develop a self-reinforcing momentum (which we used to call “Leads and Lags”) and then they turn on a dime and go the other way. I’ve been generally US Dollar bullish for years…but recently I’ve started buying other currencies against the USD…thinking it may be […]

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