Last night, I hosted a futures livestream on Tiger’s platform to discuss shifts in the U.S. dollar cycle. We explored whether it was time to buy the dip in gold, along with trading ideas for currencies, crude oil, and U.S. equities. If you missed the livestream, you can watch the replay here >>
Below, I have organized the key takeaways and trading views from the session by topic. For those who did not have time to attend, this should provide a quick overview of my current market outlook. First, a brief introduction to my background:
Here are the key views I shared during the session:
In this livestream, I focused on two main investment themes: how to identify the risk of a weakening trend in U.S. equities, and how to choose the right instruments and find opportunities when trading crude oil. Rather than trying to predict short-term price moves, the greater priority should be the risk-reward profile: where to take a defensive stance and which opportunities are worth pursuing.
US Equity Outlook: Nasdaq Tests Key Support as a Weaker Trend Raises the Risk of a Sharp Pullback
$SP500指数主连 2612(ESmain)$ $纳斯达克(.IXIC)$ $NQ100指数主连 2612(NQmain)$ $微型NQ100指数主连 2612(MNQmain)$ $道琼斯(.DJI)$ $道琼斯指数主连 2612(YMmain)$ $微型道琼斯指数主连 2612(MYMmain)$ $罗素2000指数ETF(IWM)$ $罗素2000指数三倍做空ETF(TZA)$
February, May, August, and October are months when U.S. equity indices frequently reach turning points, with February and October showing a relatively higher probability of such shifts. We are now in the critical October window, and the impact of the latest economic data has significantly increased uncertainty over the direction of equity indices.
The latest higher-than-expected CPI reading has cast doubt on the likelihood of an October Fed rate hike. Even if the Fed does not raise rates in October, the probability of a December hike has increased substantially. Previously, markets had broadly viewed an October hike as a near certainty. Following the data release, the rate-hike trajectory has shifted once again, putting pressure on equity valuations.
The Nasdaq has now fallen to around the middle band of its weekly Bollinger Bands—the 26-week moving average. Previous tests of this level have repeatedly been followed by clear rebounds. If the Nasdaq decisively breaks below this support, the broader uptrend that began in the first half of this year will be broken, raising the possibility of a trend reversal. Investors holding U.S. equities or assets linked to U.S. equity indices should prepare in advance by hedging, adjusting position sizes, or taking other risk-management measures to guard against substantial drawdowns.
Current Oil Strategy: Futures Offer Capital-Efficient Commodity Exposure
WTI crude oil futures trade for 23 hours a day, with only a one-hour settlement break, making them well suited to Asian investors’ trading schedules. Crude oil ETFs, by contrast, trade only during the 6.5-hour U.S. equity market session.
$WTI原油主连 2612(CLmain)$ $微型WTI原油主连 2611(MCLmain)$ $小原油主连 2611(QMmain)$ $天然气主连 2611(NGmain)$ $小天然气主连 2611(QGmain)$
For positions with the same notional value, crude oil futures require a margin deposit of only around 10%. The remaining funds can be placed in U.S. dollar time deposits to earn high interest, and position adjustments do not require large fund transfers. Crude oil futures are directly linked to the underlying physical commodity. They do not exhibit long-term tracking error, and their price movements are fully aligned with those of spot crude oil.
Individual investors can consider CME’s CL crude oil futures contract as their primary choice, while those with smaller accounts can choose Micro WTI Crude Oil futures. The two differ only in contract size, by a factor of 10, and their price movements are identical. Crude oil futures are quoted separately for different delivery months, giving investors a broad selection of contracts to match their intended trading horizon.
Crude Oil Strategy: Watch for Cost Support Near $55 and Consider Bull Calendar Spreads
In the absence of an exceptional price-war scenario, the full-cycle cost of U.S. shale oil and deepwater crude production is approximately $55 per barrel, providing a key medium- to long-term support level for WTI crude oil.
Crude oil prices can fluctuate around this cost range for an extended period. Investors can establish a small core position within this range without trading frequently. Once a catalyst emerges, prices often move higher quickly.
While prices are consolidating around this cost range, investors can complement their holdings with option-selling strategies to generate additional income. There is no need to become overly preoccupied with short-term fluctuations; the approach is simply to hold the core position patiently.
Rangebound Near the Highs: Buy Nearby, Sell Deferred and Watch for Wider Crude Spreads
With the Strait of Hormuz still not reopened, oil prices remain volatile at elevated levels. Taking an outright long or short position carries the risk of substantial drawdowns, while this strategy offers a greater margin of safety.
The strategy involves buying a near-month crude oil futures contract while simultaneously selling a corresponding deferred-month contract. It seeks to profit from the spread between the two, based on tight near-term physical supply and expectations of looser supply further out.
Trade Review: Calendar Spread Widens from $3.00 to $3.60; Exit Discipline Matters More Than a One-Off Gain
The spread between the December contract and the following March contract has now narrowed to around $3 per barrel. The maximum downside risk is limited to the spread falling to zero, while there is ample room for it to widen, making the trade an attractive opportunity.
Recently, I entered a long position in this calendar spread at $3 and exited at $3.60. The trade generated a return of approximately 5% in just half a day—a considerable result. The strategy can be used for both short-term swing trading and medium- to long-term holding, making it suitable for investors with different trading styles. Its downside risk can also be assessed in advance, making risk management easier.
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