Tue Mar 28 Inigo Montoya coined it perfectly. Fast forward to the modern day pivot narrative. Once again frantic calls can be heard for a reversal of Fed policy. Is that what is happening? I don’t think so. I’m betting on a pause for ’23 and some rate drops in ’24. Is that Fed easing? Nope. Powell has made it crystal clear (again for all those with their fingers in their ears) that the Fed’s primary concern is balance sheet contraction. That contraction is anticipated to continue into ’24 and likely beyond. Contraction is the equivalent of synthetic rate hikes. Get used to disappointment folks. Stocks could be chained in no man’s land for several years going forward. Compound that with a tedious gravitational pull to the downside as earnings adjust to higher rates. While investors lan

Sun Jan 8 Here are a couple of long ETFs to start the year with. They all have options and some weekly expirations. The market could get a lift with the inflation numbers next week (core MoM and CPI are expected to be flat). Powell will also be speaking at the Riksbank Symposium. There is still plenty of bullish sentiment (cashflows into ETFs and Q3 rally banter). I still see any decent rallies as short opportunities. SLV, GDX, IAK, FEMS, XLF, VGLT Good trading!

Sun Oct 9 Ok, my last post droned on about how I was going to let these calls ride since they were “free” positions born from my grinder account. At the end of the trading day, I started thinking about inflation data next week and decided to pocket the decent overnight profits. TQQQ is sitting on a double bottom (from Sep 30). Any perceived inflation improvement could spark another snap rally. Core inflation on Thur is the important data. CPI is expected to slight improve with a YOY rate drop to 8.1% (from 8.3%). Core could be a problem however due to hikes in a number of non-energy services. It could lift the YOY rate to 6.5% (from 6.3%). Could chip away at the inflation peaked hypothesis. I’m going to stay small next week and go into Thur relatively flat. Good trading!

Sun April 9 The Fed Reserve saw fit to keep rates at 0% for well over a decade (since 2008). We have a generation of young financial professionals who have never had to contend with rates. Rates have simply been nonexistent. Our entire economy reconfigured itself to 0% cost of capital. Companies could fund themselves with free money and turn around and purchase their shares. Executives have made fortunes from stock incentive programs. Shareholders don’t complain since the stock prices keep rising. Massive bubbles have formed in real estate, credit, and stocks. Never underestimate the financial bubble formation potential of 15 years with 0% rates. Fast forward to today. Stocks act like they want to break out to the upside. Market rates have been dropping (witness the surge into sh

Thur Sep 22 I continue to like energy (crude in particular). I was going to buy CL futures yesterday after the EIA report but never did. These weekly reports have been flat-out wrong (IMHO) and will be corrected when the monthly data is released. I still have a slug of USO 70 puts that expire tomorrow. USO is pre-market at 70.58 so they are looking good. The gov’t is claiming that they will look to repurchase oil for the national reserve below 80 which will help put a floor there. Outside of a worldwide depression, these current crude levels look attractive for put selling and long swing plays. Good trading!

Thur Sep 22 Took advantage of the crude pop this morning to unload. Sold the puts last Fri at 1.77 and bought them this morning at 0.65. Profit of $112/option less commissions. These are greased lightning at this point. If I am going to be long, would rather it be in futures than stock that was put to me. Good trading!

Tue Oct 25 Buy or sell?? I continue to dislike equities (long term) but the little bounce underway could grow legs. The buyback blackout ends shortly. Could be $5 Billion a day in buybacks until year-end. No shortage of cash on the sidelines. Nov/Dec are seasonally strong months. SPX took out 3812 ( an estimated CTA buy level). But the real long side hot sauce is that rumors are swirling regarding a Treasury Twist program. That’s the Treasury mind you and not the Fed. Twist involves bonds but could ignite stocks in a big way. Did I mention the Nov elections? A near-term Treasury operation seems mighty plausible. Even Barrons is talking about the great opportunity to go long at this point. So OTM calls are a cheap way to play. The party spoiler narrative is that the Fed is unlikel

Fri Oct 28 I started buying calls back on the 25th (see prior post). I like to start with 25% to 33% of the intended size to allow adds. I generally won’t chase so this approach can mean a smaller position if it takes off from inception. I’m Ok with that as an equal opportunity profit taker. This time I underestimated the tech generals’ earnings misses and forward guidance. The upside is that I got to add to the position at better levels. Buybacks start next week. Given the degree of the selloff, I suspect these same generals will be aggressive buyers of their own stocks. Blackrock thinks the Fed will come out with softer language next week. Twist sounds inevitable, particularly by the Treasury. Twist isn’t actually QE as it does not change liquidity but the stock market will likely s

Tue Aug 16 6:30pm PST Starting a short position. Small size but I can’t sit here and not get short. I know, the latest bill slaps taxes on buybacks next year. There’s a hoard of cash on the sidelines looking for action. There is a hoard of money managers convinced the Fed will come to the rescue. Yes, this market could continue to gather steam. Stops will do their jobs and I will look for higher entries. Current stops are at 4626. For you techs, SPX at 200 MA and RSI on the moon. What’s not to like? Good trading!

Tue Sep 13 These markets remind me of that timeless exchange between Vizzini and Inigo Montoyo in the Princess Bride: “You keep using that word. I do not think it means what you think it means.”. Not much to say lately. Stocks have been stuck between inexperienced money managers who only know easy money and a new reality. Today was supposed to be a big rally. Rumor has it that 48 of 50 Street economists totally missed this CPI print. Reality won. It always will in the absence of central bank manipulation. I continue to like the commodity and energy sectors. Short-term swings with futures and short option plays look best. If you dabble with short premium, watch your gamma. Explosive price bursts in either direction are likely while the Fed sorts out its monetary policy. I don’t believe

Wed April 12 Another sector that I have been accumulating lately are the miners. I bought a chunk of TRX several weeks back and am nibbling on GDXJ and SILJ. The dollar is finally loosing steam both technically and fundamentally. Continued Fed hikes will help support it but we are arguably getting close to the end of that road. My guess is that the Fed will then just sit on their hands (absent a crisis). Remember, if they are forced to drop rates like a rock and print away full steam…. that is not good for you or our economy. The dollar would in that case trade lower than petrified frog dung in a lagoon and we could usher in Weimar style inflation. If we can avoid crazy town, the dollar should gracefully drop over the years. There is still nothing to replace it although China would lo

Thur Sep 8 Booted most of the position (for a profit) on the NG pop above 8 this morning. Nothing to write home about. Sept is generally a crappy month. I firmly believe significant earnings downgrades are in store for later this year. While stocks deserve to crash from here, they could also just chop lower to frustrate everyone. Short option premium plays (with a directional bias) are generally the easiest profits. Selling calls on overbought stocks (with weak fundamentals) and selling puts on oversold stocks (with strong fundamentals) can be a good setup for short strangles that hopefully benefit from some mean reversion. Good trading!

Sun Aug 21 Nothing exciting on the USO covered writes. Slightly profitable. This week will be the deep decay period. See previous posts for these trade details. So long as crude stays above 85, I will keep selling weekly calls against the position. Am taking on some other energy plays as well. Will be looking into some healthcare covered writes this week. The ES futures have worked out well so far. I believe I put out the entry info in real time on this one. I got in at 4306.25 and was able to take a few off at 4206.25. That was a 5K profit/future. This was a small position (spec) so not a lot of contracts here. I have lowered the remainder stops to 4260. I seriously dislike this market but am covering my butt here. I’ll add if it goes my way. People who have never seen a crashin

Tue Oct 11 Picked up the strangle for a spec. Any more downside and this market will likely fall out of bed (which I don’t expect to happen… yet). There’s a good chance that we get a bullish surprise that fuels animal spirits (CPI, earnings, perhaps). If we get the action, this should kick off a few dollars. If not, it’s a relatively cheap play. Good trading!

Fri Sep 16 Sold puts naked as a short-term spec. Oil has been hammered and is a sector I continue to like. I want to get into precious metals but don’t like the looks of the dollar. Keep an eye on the TIPS ETF. Fed-Ex guidance was an eye-opener as I have been calling for. We’re at the tip of that iceberg. This is a good time to drop your portfolio dollar risk and take it slow. No shame in cash… especially at 4%! Good trading!