Retrospective 5/27/17

Retrospective–

Our trading style is to have market opinions, but not to trade directly upon them. We follow momentum. Price is truth. However, our hedging is discretionary. We hedge both dynamically (timing risk and taking positions) and statically (matching markets that usually move in opposition).

SPX finally broke above 2400. Took a lot of effort since all the momentum is in the NDX. As you can see below the breadth is acceptable. But we would rather see a broader market move. NYSE is our primary breadth watch. Nasdaq isn’t as good an insight into the broader market. AMEX is a waste of time.

NDX remains the place to be…

Yield curve is orderly with exception of shorter maturities clustering together.

Only a 45 basis point rise in the 2y to trigger an early recession warning.

As you can see below the market is all about technology stocks. Utilities comes in second. Which is an odd market structure. But certainly not unprecedented.

It is our current belief that Mr. Market is birthing an new technology bubble that will run multi-year. It is based upon the growing belief AI  will change the world in a new industrial revolution affecting transportation, health, and everything else. Currently, one can buy the leaders of this potential future simply by buying FANG + MSFT + NVDA and the like.

We do not believe this is the Trump bump. If it were a Trump-bump it would be infrastructure and development and regulated-resource plays that were leading. This is the next tech bubble, maybe bigger than the first one.  If you play it (and oh how we will! ) never believe the stories that the leaders sell. Pick a momentum filter, and with a heart like a stone, focus on that. The better the story gets, the bigger the name selling it, do not argue with them. Mutter to yourself, “Yes, please, take it higher! Bring in the true believers, Let them all buy!”

Trade log 5/22/17

Closed /zn (10y treasury futures) for substantial profit. Didn’t expect to make $ on this trade. Happy. Looking to get long again once I’m back to max equity risk. Currently running half sail…

Trade Log

This blog is for entertainment only. I am NOT recommending you to trade futures. Hire a pro. Do not pay 2 and 20.

5/19/17 Partially closed /nq positions — booking profits — still long oriented. Breadth is thinning.

5/10/17 Bought some AAPL puts. Got to hedge. Mr. Market gets carried away with coke and strippers. Expect to lose $. Still. Don’t call it a hedge fund if it doesn’t hedge.

5/2/17 Long /zn as a static hedge against geopolitical craziness. Currently enjoying some return. But I don’t care if I lose here. I’ve got to sleep at night and America is in grip of an intemperate blowhard. Character is destiny.

3/28/17 Long /nq again. Back to max risk exposure

3/13/17 Partially closed /nq — booking profits

1/17/17 Long /nq — reentered after booking profits from early nov election rip, which I did not believe in and had to hold my nose to buy.

 

 

Important Futures Trading Disclaimer

Trading futures and options involves the risk of loss. Please consider carefully whether futures or options are appropriate to your financial situation. Only risk capital should be used when trading futures, options, currencies, or any type of financial derivative.

Past results are not necessarily indicative of future results. The risk of loss in trading can be substantial, carefully consider the inherent risks of such an investment in light of your financial condition.

High Risk Investment

Trading futures and foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Any opinions, news, research, analyses, prices, or other information contained on this website is provided as general market commentary, and does not constitute investment advice. Think Global Macro is blog, and as such will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

The content on this website is subject to change at any time without notice, and is provided for the sole purpose of education and/or entertainment.