Category: Trading

What a week for the stock market – NVidia blowoff earning midweek and Powell hawkish statement on Friday gave the world completely opposite outcomes based on normal expectations. Nvidia earning sent its stock price up 11% on Wednesday night but then on Thursday all that gain were wiped out during normal market hours. Powell hawkish statement initially was thought to have pressured stock market lower on Friday but then the stock market went higher in the afternoon. Media and gurus keep trying to give an after the fact explanation of what happened. But does that matter?

Here is a video discussing Burry’s bearish bet in better context. For those of you who want to ride his coattail, watch it to gain a better understanding of the macro situation. But keep in mind that the real reason why Burry made the bet can be something else completely. And also remember that the reporting of one’s positions for each quarter has a 45 days time window. So between end of June and now, Burry’s position may have changed already.

I find this video has a more balanced view of the macro factors that will shape the near future of world economy. If you don’t want to watch this hour long video, I can summarize it here – we are f$#ked.

Back to work for me. No point overthinking much on what to do when the financial system collapse or reset.

Have a great weekend all!

Option expiration week ended with SPX closing at the lowest level over the past few weeks. It is not something unexpected because of the largest technology companies had a huge rally earlier this year. Even if they are not crashing down, taking a breather for a few weeks is reasonable.

The biggest news in the financial world this week must be Michael Burry’s 13F filing. It is reported that he has positioned himself on a bearish outlook for the SPX and NDX indices using put options on SPY and QQQ. It is the largest position he has put on over the past few years. First, we do not know the expiration dates of these options. Second, we do not know the strike prices of these options. Most important of all, we do not really know if it is just a short term trade for a normal market correction which many pros expected, or a conviction trade that Burry thinks that something way worse is coming.

So no point to speculate why he is doing that. And more importantly, you can’t mimic what he does without more details. I am positioned since July on a major pullback for the big techs. I even posted charts on Twitter with the reasons and the expected downside targets. It is not that hard to figure this out.

An interesting discussion of our ever increasing demand of electricity by Patrick Boyle. His takes on EV and electrify everything are very reasonable and the expected eventual taxing on everything electric will come sooner than later. Here is my warning to anyone who think EV is the future, think of the flooding in China – the moment the power grid is down, all things electric are f$#ked.

Just search online for portable solar electric car charger and you will see all kinds of “promises” that in the future, it will become possible, but not now. I think the better answer is never. Many months ago I discussed this topic in detail from the astrology view point. In short, better expect a completely new energy source being developed than to believe whatever we have now will solve this forever increase in demand of electricity problem.

The doomers are thinking the sky is falling – an honest discussion of what to expect in the near future on the economic front.

And of course, there is David Hunter, who tells everyone that the melt up has not happened yet, and that sky is the limit for gold.

In a way, I agree with him, as long as the “one-two punch” I always refer to has not happened, the only solution for the governments and central banks worldwide is to keep printing. So hyperinflation will persist and of course, all risk assets will go through the roof.

Another busy weekend for me – can’t even take a break in the cottage country here the whole summer so far … I miss my cottage.

Have a great weekend all!

Second quarter of 2023 ended with a bang printing another new year high for S&P500. How high can it go is the buzz all over this weekend.

Macro guys like Alf are bearish for a good reason. However, without better timing, many macro players are deep in red and can only hope the recession will eventually arrive.

Some others, like Prof. Hanke, raised an interesting point about the population issue.

As usual I don’t agree with many of these videos I link to but then being able to see what others are thinking can help me discover any blind spot that I have not thought about.

One of the biggest news in financial world this week was the flood of applications to create bitcoin ETFs by several big names. Well, all of them are rejected for now. But it does not mean that these firms will not try again after they improve their applications. This development will significantly impact the crypto space so if you trade or invest in cryptos, remember to stay on top of this.

Eurodollar university has a new video up on China’s yuan. It matters because China is the second biggest economy in the world. Any shock in Yuan’s value relative to other major currencies can create a ripple effect shocking all the major financial markets. This problem is still unfolding and can be a catalyst in forcing the US stock markets to correct suddenly.

This is first of the month. So it is chores time in addition to my normal workload. Back to work for me.

Happy Canada Day to my fellow Canadians!

Another interesting week has passed with the US stock market continues to be trapped inside a tight range. Bulls believe we are going to see a new high soon because of whatever reason they can come up with. Bears insist that so far this is a dead cat bounce and reality will hammer the market back down. Maybe, it is something else all together – like we have reached an equilibrium for which the next major move has nothing to do with the current state of the market at all but some external events that will decide the outcome.

Of course people don’t like to see things this way because everyone wants their own predictions come true. Both sides have a chance to win. What matters most is that when they are wrong, can they survive for the next play?

A very interesting topic to me, “Is reality discrete or continuous?”, discussed by none other than Stephen Wolfram.

Here it is with Hugh Hendry again. This time he has a conversation with Russell Clark who has an opposite view of TLT from Hendry.

We don’t get a lot on YouTube with Doomberg as they are mainly active on Twitter only. Here is a great overview of what Doomberg thinks about various markets and the future.

Got to go.

Enjoy your weekend all!

End of first quarter of 2023 gave us a rally that destroyed most of the bears, just like what happened last year, multiple times. The signs of the squeeze was coming are there – very bearish sentiment, hedge funds all loaded up on the short side, etc. So it is not a surprise at all if you truly understand how the financial markets really work. It is just a game that the major players trying their best to mess with the gullible ones.

Haven’t seen Robert Shiller for a long while. Here is his take on US housing market.

This podcast with Darius Dale on the macro outlook for the near term is very interesting and on point thanks to Darius’ articulate narrative of all the areas he covered.

Another great interview by David Lin with E.B. Tucker. Tucker raised a few important points that everyone should pay attention to. Here is the latest article wrote by Tucker. It is a fun read.

For those of you asking what the outlook for this quarter will be, my take is that real risk is not priced into the stock market at all. I even mentioned that on my twitter. Real risk means major natural disaster, alien invasion, etc. If such risks are priced in, as in the ancient past in human history, the stock market would not be parking at the current level at all.

Thus it is not the serial outlook or trend that matters. Because one second ago, your holding was valued at certain price. But by this second, it is worthless already due to the “long predicted disaster” finally happened. How can any valuation method provide the correct price at the moment?

Got to get back to work.

Have a great weekend all!

Another eventful week where the stock market rallied into FOMC rate decision and dropped hard right after. Yet, by Friday, magic buying came back and S&P successfully go back to the middle zone of this year’s range.

Blockworks’ Alfonso Peccatiello sees a recession coming quickly and that can take down the stock market too.

An opposite view of where the S&P is heading by a guest of the one and only Hugh Hendry. You may not agree with the guest’s opinion but understanding the views from all sides of the market can help one making sound judgement in this complex market environment.

Personally, I like to use simple common sense to look at the situation. We have some regional banks scr#wed by the Fed. We have Credit Suisse taken down suddenly. By Friday there is rumor that Deutsche Bank is next one in trouble. What does that tell us? It means more uncertainties and news shocks are coming. That translate to S&P will swing two ways crazily but it may not go far either way until there is clarity. So trade accordingly.

One thing worth mentioning here is the geopolitical risk is rising again with even more countries are engaged in “hot” wars. This looks very much like the environment right before WWI. As inflation is getting out of hand, more people are facing hardship. When this reaches certain level, it will provide a platform for madmen to rise in power.

That’s something I don’t want to see happening.

Time for a bunny video to ease the negative thoughts.

Have a great weekend all!

Next week is going to be a very difficult option expiration week not only because it is a quarterly option expiration, but that we have major economic data like US CPI, PPI, and then ECB rate decision, etc. It will be a mess to deal with …

The biggest news for this week was the “sudden” shutdown of the Silicon Valley Bank. Here is the latest take on the event by Chris Whalen on Blockworks Macro. It’s just half an hour and obviously it represents the view of majority of those in the financial industry.

So, everyone is pointing their fingers at Fed and Powell. Next is how the US government will weaponize the event to force the Fed to stop raising rate or even start to do QE forever. More drama is ensured as US is also heading to the standoff game of debt ceiling in coming months.

One thing I don’t agree with these financial industry insiders is that SVB fails because of bad practice encouraged by bad policies put in place since year 2008. There should never be multiple boom and bust crisis since. By punishing bad behaviours like sending those bank executives to jail for their reckless behaviours back then you would have a very healthy economy built on organic growth from there, instead of the massive bubble we are seeing now.

At this point most of the people in the financial industry all playing along the bubble game because if they don’t, they need really good understand how trading really works to make money. For example, Renaissance Tech’s Medallion Fund will continue to do fine, so are the other few firms like Jump Trading. Since almost everyone is guilty, they would blame anyone who ends the gravy train.

Here is a different take on the subject by Patrick Boyle. He talks about Silvergate situation in details. As usual, I find his sarcasm on these subjects quite funny but it may hurt the feelings of those crypto fans.

Instead of keep talking about this heavy topic, let’s watch a happy desert making video.

Lately, I find posting on twitter with my charts on longer term trading outlook much easier than doing it through the blog or in an article within daytradingbias website. For those of you interested in these updates, you can check it out.

Back to work for me.

Have a nice weekend all!

This month we do not have Non-Farm Payroll report on the first week. Instead it will be next week due to February being a shorter month than the other months. The usual NFP week bias, however, will face a serious challenge this coming week with Powell going to speak for 2 days in a row. I am sure we will see more extreme intraday swings thanks to that.

Very interesting take of Warren Buffett’s annual letter that is just released. The explanation of the good and bad of share buybacks is a great lesson for everyone. I do not agree to many things Warren Buffett says but that’s because of my view on risk management is very different from his “empire building” mentality.

For those of you who are long term investors interested in figuring out a strategy to navigate the current market environment, here is an updated talk from Howard Marks. Great lessons from Marks as usual. If you prefer, you can choose to read the pdf instead of listening to the audio.

I find this youtube channel quite interesting because the way how intense the guy is with his presentation on global economic topics. His conclusion is a much more useful take on the current financial market environment. If he manages to find someone or a team to improve his production, his channel should gain a lot more subscribers.

Have a great weekend all!

First month of year 2023 finished with one of the best monthly performances in S&P500 history. Many anxious retail traders are now very pissed that they listened to those perma bears and failed to hop on the boat. Well, they have no one to blame but themselves. If they have access to non-free market analytics, many of them already identified at least a 50/50 chance that we see 4100 and above.

The more interesting question is whether this rally will have legs like some people comparing this to the bottom of year 2009. They have a point – years after 2009, we’ve learnt that the central bankers agreed back in end of year 2008 that they will work together when the time comes to “save” the financial markets. So those who know about the secret agreement made billions off that bottom in 2009.

This time, that very interesting bottom in year 2022 was the work of Bank of England. If it did not intervene, the UK financial system would go under and the damage will spread worldwide. So, it is reasonable to speculate that all these major central bankers will do whatever it takes to save the game from total collapse.

The problem is, what if something happens that is bigger than these central bankers can handle? Are we at such risk now?

As long as these potential disastrous events have not happened, investors worldwide will pretend that all is fine and continue to seek for alpha.

Here is a funny video from Cathie Wood on her takes about various markets. It is funny because she is really just trash talking. At this point, she couldn’t care less whether her fund will perform or not. The hefty fees she has collected in 2020 and 2021 already put her in a very good place financially. Of course, if she is stupid enough to believe her own calls and put the money to work ….

In contrary, Jeff Gundlach, speaks things he believe in with much less fluff.

All these famous analysts and macro players are telling the world that S&P will have to fall a lot this year yet the stock market has been doing the opposite against these calls. Here is another one of these macro guys, Alf Peccatiello, talking about his current take on the financial markets. I like Alf and his vids often offer very comprehensive views. But I like to point out price dynamics is not a function of macro factors.

To make things simple, consider a funny story happening now at a house just a few blocks from mine. This house was sold a year ago at a very high price to the current owner. Since then this new owner tried to rent it out at $9,000 CAD for a few months. When it is not working, he lowered the price to $7,000. And then lowered it again to $5,000. A friend of mine checked out the place and offered to rent it at $4,000, which is already too much (reason below). The owner said he would never rent it out below $5,000. He even boasted that he has a lot of money so he does not need to rent it out at all. This house is still listed for rent today.

Participants in a market do not need to be rational. This owner of the house may not know that other houses bigger than his on the same street all rented out at or below $4,000 before he bought his. Yet he paid a price that top ticked the market with the belief he can rent it out at $9,000. The other properties in the area of similar size are sold at 30% lower than his purchase price lately. He must have his reasons when he made his decision to buy the property at that very high price, no matter how dumb those reasons are. And same goes for his conviction that he will not rent the house below $5,000, he must have his reasons. As long as he has holding power, he does not need to follow what others do.

If everyone is rational in making every decisions, human race should have been gone for a long time. I would say majority of people are irrational beings and majority of their decisions are made emotionally. That’s why it is fun to watch how price moves.

Back to work on my projects.

Have a nice weekend all!