Sat Aug 27Say it ain’t so! I made a decent long S&P call back on Jul 14 (see prior post). That countertrend trade picked up over a 40% return. That should have led to a nice short but along came the FOMC. An army of people who have never experienced anything except government handouts incorrectly interpreted Powell’s comments from the meeting. They decided an early Fed policy pivot was front and center. The point is that counter trades could be more frequent and far more profitable due to this crowd. Unfortunately, they are batting with one hand tied behind their back due to a lack of experience.On a separate note, the USO 74 calls expired yesterday for a 3.7% two-week profit. I continue to like energy and am patiently waiting for metals. When gold finally moves, the miners could
RipcordLoki
Trader with an Australian Shepherd sidekick named Loki.
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Are we “pivotless”????
Are we “pivotless”????
You Keep Using That Word…
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
Long ETF Candidates
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!
Out TQQQ Puts +42%
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!
Debt Detox
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
Buying TQQQ Nov18 22 Puts
Thur Oct 6 Picking up TQQQ puts on a spec. All this pivot fixation is pure and simple mental **. The Fed has clearly said they are focusing on inflation. The world banks have lit a worldwide inflation fire. This could take years to sort out. Our Fed hasn’t even done anything of consequence in unwinding their balance sheet. They doubled it to 8+ Trillion after Covid. There is no real QT while that mountain is sitting out there. There is now an $80 oil floor in my opinion. I am picking up long energy exposure whenever I come across attractive setups. I am nibbling on metals miners but nothing significant. The dollar and real rates have to top out. Watch TIPS. Kicked out the PSQ covered write for a small loss. Should make max profit on CVX covered write assuming it stays above
Buying TQQQ Nov18 22 Puts
Sell or Buy?
Wed Nov 23 There might be a rally at year-end but yield curves are screaming sell. The following 10yr Treasury 3mo TBill spread says it all. Take a look at the max inversions and check out the corresponding SPX performance. Note that all recoveries after 2008 were Fed induced. We are in a new world with persistent inflation and yet to be seen massive layoffs. The Fed is refraining from a pivot because it has no choice. The world is heading into a recession/depression. Even when the Fed finally pivots, there will be months if not years of pain ahead. Look at past data. Recall that there is approximately a nine month lag for Fed hikes to trickle into the economy. Hikes started in Mar. The buy side will engage in their usual year-end window dressing. After that, it looks like crap.
Sell or Buy?
Would’a Could’a Should’a
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!
Out USO 9/23 70 Puts
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!
Bought TQQQ Nov18 24 Calls
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
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