In late August we took a simplified look at the Bond market and discussed the potential for mean reversion lower (Rates higher), but that the market remained choppy and we should adhere to strict risk management to avoid getting run over on the short side.
Choppiness continued, but Bonds have sold off a bit.
So what now? Let's take a comprehensive look at Bonds and how we're approaching them into year-end.
I agree. Lots to play on the upside. That said, lets not get crazy here. We still need to put ourselves in some high probability situations and not bet the farm on any one trade. So let's take a look at a good opportunity in that vein.
On October 26th I had the privilege of speaking at the Trade Ideas 2019 Summit in San Diego. It was a great opportunity to share our views, but more importantly, meet a ton of new people from all walks of life and hear their different perspectives. I had an absolute blast.
Last year JC presented at the same conference, outlining our very bearish thesis for Equities. This year my tone was the exact opposite!
I only had thirty minutes, but I ran through nearly 100 slides of Equities, Commodities, and Interest Rates, outlining our bull case for Equities.
The full video is available below and you can email info@allstarcharts.com if you'd like the full slide deck. Hope you enjoy!
Going through charts this weekend, there are a few things that stood out.
First of all, the biggest company in the world is on pace to easily double in value in 2019. How do you think things are going around here? My bet is pretty darn good:
What do we know about all-time highs? They are not a characteristic of a downtrend. New all-time highs are things we see when we're in a market environment where it is more advantageous to be buying stocks rather them selling them. This is what we have today, whether you like it or not.
The market doesn't care that you don't like the president. The market doesn't care that you think this is only because of buybacks. The market doesn't care that you think this is fed driven. THE MARKET DOES NOT CARE WHAT YOU THINK ABOUT ANYTHING.
EVER.
Anyway, on Halloween we got new all-time monthly closing highs in the S&P500, Dow Jones Industrial Average, Global 100 Index, Nasdaq Composite, Nasdaq 100, S&P 1500, Dow Jones Composite Average, Consumer Discretionary Index, Technology Index, Semiconductor Index, US Real Estate Index, J.P. Morgan Chase, Microsoft, Apple, Google, the Europe Hedged Index Fund and Brazil's Bovespa, among many others.
Are these reasons to now all of a sudden start selling stocks? My argument is no.
Tuesday's Mystery Chart is one of the most interesting charts right now, so thank you all for your feedback and participation.
Most people were on the same page in saying they wanted to short the breakdown, while others wanted to avoid the mess entirely until there's a decisive break.
As I do at the end of every month, I scan across my portfolio of open positions and observe any positions which hold options nearing expiration in the upcoming month. Today being October 31, I'm setting my sights on November expiry.
I think it's fair to say we options traders -- and really all traders -- see and think about the world around us differently. I mean, who has conversations like this?
This is a lesson I had to learn the hard way for sure. Early in my career I used to always want to be trading the Russell 2000 or the Nasdaq and sometimes even S&P futures. Some people can do this successfully. Most cannot.
A wise Egyptian man once taught me that, If you trade the Averages, You'll Get Average Returns. This made a lot of sense to me when he first said it, because I didn't have great experiences with that strategy up until that point.
The reason I bring this up today is NOT to convince you not to trade the index ETFs or Futures. You do what you have to do! The point of this post is as a reminder that we use Technical Analysis to identify trends. These trends are in all asset classes - Stocks, Bonds, Commodities, Currencies, Interemarket relationships, Crypto and others. Once we identify the trend, then we can figure out the best way to try to profit from its theme of rising or falling prices.
