These names have my interest piqued for the trading day ahead. While I do still see the market internals continue to weaken, it just means you have to be faster about taking out some profit if it’s a shorter trade. My buddy over in my trading room (sup binks)…has the sort of patience you need with the long(er)-ish options depending on how far down they fall. That and the odds of them coming down against you/us/any trader in a manner that makes the more emotional in us come out. But we’d always been so good in the past at a certain strategy.
Try to remember that markets dynamics are the keys here…this would be a great time to preach Soros and Reflexivity (his Alchemy of Finance is one of the best investing books ever written. I’ve read it more than once because it’s practical yet more lucid than the heavy theoretical econ books. You know, the big ones any of you finance majors used to lug around that taught you efficient market hypothesis was real.
If you haven’t noticed yet (about the EMH fallacies). Here’s a brief concept of Soros and Reflexivity….I do want to write something longform about this soon…but you guys are here for the picks right? :-p
All this has changed as a result of the financial crisis of 2008. My conceptual framework enabled me both to anticipate the crisis and to deal with it when it finally struck. It has also enabled me to explain and predict events better than most others. This has changed my own evaluation and that of many others. My philosophy is no longer a personal matter; it deserves to be taken seriously as a possible contribution to our understanding of reality. That is what has prompted me to give this series of lectures.
So here it goes. Today I shall explain the concepts of fallibility and reflexivity in general terms. Tomorrow I shall apply them to the financial markets and after that, to politics. That will also bring in the concept of open society. In the fourth lecture I shall explore the difference between market values and moral values, and in the fifth I shall offer some predictions and prescriptions for the present moment in history.
I can state the core idea in two relatively simple propositions. One is that in situations that have thinking participants, the participants’ view of the world is always partial and distorted. That is the principle of fallibility. The other is that these distorted views can influence the situation to which they relate because false views lead to inappropriate actions. That is the principle of reflexivity. For instance, treating drug addicts as criminals creates criminal behavior. It misconstrues the problem and interferes with the proper treatment of addicts. As another example, declaring that government is bad tends to make for bad government.– George Soros
[source: https://www.ft.com/content/0ca06172-bfe9-11de-aed2-00144feab49a ]
With that said here’s what I’ve got watchlisted for the day (already in some).
- $PCG – Huge order of aggressive Calls bought towards EOD
- Massive block trade of $CRM; keep an eye out.
- $SPY money flow was negative but $IVV was amongst the strongest in the market yesterday in money flow accumulation. Which makes to sense.
- It’s a holiday weekend, I wouldn’t expect too much volume so don’t go crazy with adding to your portfolios today. I think the market will go up on a drive by crude. I’m going to assume Baker Hughes drops the active rig count.
- I say that because some of the most bullish options flow was into the some energy names towards the end of the day.
- The banks that were flat and coy for most of the day yesterday all ended on strong buy volume. So watch $XLF today as well.
- I do think bonds haven’t turned bearish again anything…that’s why i bought an equity starter in $TMF yesterday.
- Other Names of Interest: $JD $TSLA [+.55 premarket presently]..LGF.A [+.28] $GE [+.06]
- $AAPL was up way higher but is being brought down now, which a likely explanation as to why the markets as aa whole just came down.
- In this environment you don’t want to be selling volatility yet. Things are too frail.
- Something is up with $AFSI … big order in the name was cancelled at then replaced for a lower fill…which makes me want to think that almost has to imply buy activity.
- $MU had large block orders yesterday as well as money flow accumulation; $NVDA did also.
- $PBR [careful there though]
Watchlist ’em; let’s see what happens. Per the norm I’ll keep you up to date as we go in the room or on StockTwits.
In-terms of trend shifts; almost all of the bonds are flashing buy signals. $TLT I like there; but as mentioned I took $TMF instead yesterday.
Gold – Short-term but flashing some buy signals.
Silver – Bullish [$SLV or $AGQ]
New [or sustainted] Bullish Equity Signals: $R $NI $CNP $SYMC $COTY
ETFs: Still bullish $TUR and own it. Considering $YANG
Bearish Equity Signals: $BAC $BBY $CTL $REX $TGI
Yeah that should be enough for a watchlist for today I think. I actually made one for those of you with TOS.. http://tos.mx/7oQnbO
Today in History: Star Wars was released on May 25th, 1977. May the force be with you.’
So the other day I posted this to StockTwits and I felt like it was actually pretty cool.
That could be my bias towards loving The Matrix trilogy, but I still found it clever (pats self on back).
More importantly, it was a very quick lesson that I wanted to expand upon. It’s an important one.
— Rishesh Singh (@androsForm) May 20, 2018
Yesterday’s markets followed more or less as what was to be expected.
That whole rhythm of the market thing.
Know why chart patterns exist? Sequences recur.
Some don’t, but the fact that some do is the fundamental basis of patterns. Be they chart patterns or otherwise. Candlestick patterns are still a very popular tool amongst chartists because those patterns are the sequences that recur the most.
And, frankly, it seems like these patterns haven’t changed much or you wouldn’t see them on any chart you can name.
Unlike nature, the Golden Mean/Fibonacci Spirals [where the Fibonacci levels come from in charting], markets don’t stick to those levels or follow them perfectly. That’s why they’re called levels in the market.
Nothing can be certain.
What To Look For Today
With that said….I think we’re going see a kinda choppy morning but an overall bullish day, with some very strong slopes up.
- -I expect $VIX to gradually chop up. Don’t forget markets can go up as $VIX does.
- As of 6:50 AM, S&P 500 Futures are trading -4.25 @ 2718.75. They’re moving up on good numbers from $WMT. Oh, now it’s 10 minutes later and I checked before posting and now $WMT trading down. Haven’t read the E.R. yet.]
- There are three big numbers out today. The Philly Fed Manufacturing Index and the initial jobless claims data come [email protected] 8:30 AM EST | Analysts are expecting solid numbers there. The third is Natural Gas Storage at 10:30 AM. If markets need another kicker after morning chop that could be it. Or it very well could start the chop. Let’s see.
- Trend-wise remain bullish on SPX watch 2680ish as a reversal to get scared about.
- Bio-techs look stronger.
- Airlines look stronger.
- Other names I’m watching today for entries/averages on.
- The trend isn’t broken.
- I noticed way more equity blocks going through than usual vs. big opening options positions. The skeptic in me wants to say that we go up today but on low volume due to that sort of action.
- One caveat; Yesterday the 30-year note briefly broke its present resistance but pulled back quickly. If you asked me, I’d say that it was probably some of a Fed taper sale. The Fed is going to want to sell bonds high, ya know. So while that bond trade happened it might not be so important…today anyway.
Sorry for not posting this last night….hence the improper date. I’ll do one tonight. At the right date
I was looking at a chart of the US Dollar and had this random thought.
Hey, some of these moves look remarkably similar to another currency’s.
Here’s the all-time dollar chart…
[source][I added the log as well because that makes the moves a bit more fair to compare].
Then I went looking for an all-time dollar volatility chart…and realized someone already had this idea and wrote a great read.
The apt beginning of the writer’s conclusion makes the point I was trying to get at.
The short answer is that Bitcoin’s biggest volatility moves are more intense than the dollar’s volatility moves historically. And that shouldn’t be surprising. Here’s a bit more detail.
First, the longest overall downward streak in the U.S. Dollar Index that led to the highest decline in the value of the U.S. dollar was between January 2002 and December 2004. That’s nearly three years. The index dropped by about 32.8 percent during that period.
By comparison, Bitcoin’s sharpest downward streak that led to the highest decline in price was between January 2014 and April 2014 — about three months. The digital currency lost about 60 percent of its value during that period. There was no time over the last three decades that the U.S. dollar lost so much of its value within months. In addition, Bitcoin’s longest downward streak lasted between November 2013 when it reached a high of about $1,242 and January 2015 when Bitcoin reached a low of about $192 — an 85 percent drop.
It’s a great read. “Bitcoin vs U.S. Dollar: Cases of Volatility
[Note: I’m essentially going to be starting a newsletter that’ll be short-form most of the time. There’ll a side-page on the blog once that kicks into gear for these notes. PDF Version is linked at the bottom]
Hell of a day.
Some solid gains on several names, but the markets as a whole have gone loco. MUY loco.
For an extended period of time during the day today..stocks,bonds,gold, volatility AND the dollar were ALL trading down. Even weirder, downward pressure on all of them simultaneously.
Market dynamics tend to behave in a manner that asset classes are typically forces that act against each other in some weird and twisted attempt at a contrived equilibrium.
Over the past two days, headlines have been flooding my newsfeed regarding Amazon’s decision to…wait for it…wait for it….RAISE THE PRICE OF AMAZON PRIME!
Oh no! Say it ain’t so, Bezos. Say it ain’t so.
And God said, Let there be light: and there was light.
And God saw the light, that it was good: and God divided the light from the darkness.”
- Genesis 1:3-4 KJV
Not to worry this isn’t a bible thumping lesson.
This is a quick primer on trading smaller accounts.
Quick intra-day post here…
The Power Of The First Candle(s)
Cool chart dude….so…
Look at what I drew arrows to; Those are bullish candles, right before open and after open.
Bottom line is this; until volume eclipses the nature of those initial candles, the stock is going to move in that direction. Even if it fades on lower volume, until the large opening volume bars eclipse the volume there…the stock short (for intra-day purposes) be considered as maintaining the trend of the first candle (or candles, depending on your timeframe).
More on that later, it’s intra-day so I have some trading to do.
Hop aboard the new room when you get a chance…most sections are free, including a heat map, Unusual Options Activity, Economic Data Calendars and more. Sign up over here.