Live from the Trading Desk

Featured Guest Mark Leibovit

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on Sunday, 04 February 2018 15:31

Mark updates Mike on the long term Cannabis sector as well as some opportunities generated after the recent Dow Correction

....also Michael's quote of the week: Einstein Kicks It Through The Uprights



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Buckle Up For a Major Sea Change

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on Monday, 22 January 2018 07:25

Victor points out that money is starting to move into the sold out Commodity sector which relative to stocks is down 75% in the last 7 years to an 18 year low. 



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Fear Of Missing Out

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on Tuesday, 16 January 2018 13:32

Victor on what's driving stocks, crude oil, interest rates & Gold sharply higher & the US dollar 

Index breaking down sharply lower in the first few weeks of 2018

Screen Shot 2018-01-16 at 1.41.07 PM


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Core Themes Going Into the New Year

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on Monday, 08 January 2018 06:20

Victor Adair Live from the trading desk on his core expectation for 2018 plus areas where the danger lies.

...also from Michael: They Chose Rape, Beheadings and Murder



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Victor Adair: Strap In For The Battle Royal

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on Sunday, 17 December 2017 13:02

The skitzoid action of the markets the past couple of weeks has set up some fine opportunities.

Victor's Trading Notes:

Market price action (across asset classes) has been skitzoid the past couple of weeks...up one day, down the next (and in some markets up and down within the same day!) as breaking news or central banker comments have buffeted prices...while competing views about the future, about what’s important and what isn’t, seem to be enthusiastically embraced one moment, and then thrown under the bus the next! Yikes!

For me the big question is about the USD. My good friend Jack Crooks (www.BlackSwanTrading.com) makes the case that there are 2 primary expectations competing in the FX market:

     1) the US Dollar is about to rally on rising yield spreads, as the leader of synchronized global growth, as the beneficiary of Trump tax cuts and a self-reinforcing flow of multinational cash repatriation and foreign direct investments and,
     2) the counter argument that the good USD news is priced in and any rallies will fade quickly as the rest of the world’s major central banks also start raising interest rates (narrowing interest rate spreads) and their strengthening economies attract capital flows away from America.

Since the Sept 8 Key Turn Date (KTD) I’ve looked for opportunities to buy USD against other currencies...but my risk management rules kick in if it falls. My favorite FX positioning since the KTD has been shorting CAD against USD and this week, with the choppy price action around comments from BoC Chief Poloz I was stopped for small losses when CAD rallied.

One of the hardest things to do when you get stopped for a loss is to put the position back on and that’s exactly what I did...so I started the week short CAD...got stopped out for a loss on the Poloz rally...and then I re-shorted it. If I had begun the week with no CAD position and was simply looking at the price action I’d have to say that CAD looked to be at risk of breaking down...and I’d sell it. I think CAD actually looks WORSE after this week’s “failed rally.” This week CAD had its lowest weekly close in nearly 6 months. I think it’s at risk of breaking through the lows of the past 2 months (around 7750 basis March) and if that happens it could fall to 75 cents or lower. I hope to have the “courage of my convictions” to add to my short position if it breaks to new lows.


Larger Chart

Crude oil also had wicked market action over the past month as prices seemingly surging higher one moment and then fell sharply the next. Like the 2 primary expectations competing in the FX markets noted above there seems to be 2 competing views in the crude market:

     1) The production cut back agreements made by OPEC-and-Allies has not only substantially reduced global inventories but demand is now running ahead of supply and prices will therefore continue to rally and,
     2) Rising prices (WTI rallied from ~$42 in June to ~$59 in November) have been the “best fertilizer” for increased production...American frackers have really ramped up their production...with expectations that total American production may increase by another 1 MBD in 2018. This view is that prices have already topped out around $59 and IF prices drop below $55 then the HUGE speculative bullish positioning in the “paper” oil market will start liquidating...thereby accelerating a price decline.

I have traded WTI almost exclusively from the short side since 2014 and therefore have a bearish bias towards crude. Unfortunately this bearish bias kept me from buying crude during the rally from $42 to $59 but at least I didn’t “step in front of the train!” I waited for what I thought was the “As Good As It Gets” moment following the Nov 30 OPEC meeting to come and go...waited for the market to hit a high ($59) , fall back, hit a lower high (a failed rally) before I sold it short around $58. The market broke to $56 but then rallied all the way back to $58.50 (the halted UK pipeline story) and stopped me out... turning a nice little unrealized gain into a nice little realized loss! Darn!


Larger Chart

I still think WTI looks toppy so I’ll watch for an opportunity to re-short it.

At the end of the week I’m short CAD and long Euro puts.

PI Financial Corp. is a Member of the Canadian Investor Protection Fund. The risk of loss in trading commodity interests can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. In considering whether to trade or the authorize someone else to trade for you, you should be aware of the following. If you purchase a commodity option you may sustain a total loss of the premium and of all transaction costs. If you purchase or sell a commodity futures contract or sell a commodity option  or engage in off-exchange foreign currency trading you may sustain a total loss of the initial margin funds or security deposit and any additional fund that you deposit with your broker to establish or maintain your position.  You may be called upon by your broker to deposit a substantial amount of additional margin funds, on short notice, in order to maintain your position.  If you do not provide the requested funds within the prescribe time, your position may be liquidated at a loss, and you will be liable for any resulting deficit in your account. Under certain market conditions, you may find it difficult to impossible to liquidate a position. This is intended for distribution in those jurisdictions where PI Financial Corp. is registered as an advisor or a dealer in securities and/or futures and options. Any distribution or dissemination of this in any other jurisdiction is strictly prohibited. Past performance is not necessarily indicative of future results


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Victor Adair: Here Comes Volatility

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on Wednesday, 06 December 2017 07:01

Victor is sensing the complacency we've seen across the assert classes has changed. The Dow swung 400 points on two separate days and the Canadian dollar boomed on an unemployment number, indicating increasing volatility going forward.

....also from Michael: One of the Greats in the Business, Mark Leibovit Tells Us "What's Next"



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Victor Adair - Political Uncertainty - Stand Aside

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on Tuesday, 21 November 2017 09:21

I have a longer term Pro-USD bias...perhaps because I’ve made money the past few years being short currencies against the USD...but right now I’m unsure what to do so I’ll stay out of the currency markets. Victor outlines opportunities in Gold, Crude Oil and the Stock Market


Choppy price action in currencies: The September 8 Key Turn Date launched the US Dollar on a 2 month rally against most other currencies...the US Dollar Index rose 4.5%...but the past 2 weeks the price action was choppy with Euro, Yen and Gold all higher against the USD while AUD and NZD fell and CAD went  sideways. My core short term trading idea since the Sept Key Turn Date has been to be long USD but for the last 2 weeks I’ve been on the sidelines...unsure what to do.

Some analysts make the argument, and they may be right, that the recent 2 month USD rally was only a correction in the downtrend that started in January when the US Dollar Index was at 14 year highs. Interest rate premiums clearly favor the USD (at the 2 year point of the yield curve the USA is premium Germany by 242bps., premium Japan by 192bps.) but those premiums have not deterred a good rally in Euro and Yen the past 2 weeks. The ECB says the Euro area needs continuing monetary stimulus while the Fed says they will be “taking back” previous stimulus and raising rates...while the BOJ remains “peddle to the metal”...but still the USD looks wobbly.

Perhaps the USD is weighed down by “political uncertainty” in Washington relative to the “political certainty” (don’t laugh!) of the Euro zone.

Other analysts make the argument, and they may be right, that the recent 2 week decline in the USD is but a brief correction in the early stages of a developing USD rally.

I’m aware that I have a longer term Pro-USD bias...perhaps because I’ve made money the past few years being short currencies against the USD...but right now I’m unsure what to do so I’ll stay out of the currency markets.

Gold: I bought gold this morning. A small position, and I’ll be gone if it falls back below yesterday’s close, but today’s price action looks good. I’ve noticed that YTD trading volume in the gold futures market is already higher than any previous year...and there’s still 6 weeks to go in 2017. That seems counter-intuitive given the sideways price action we’ve seen in gold while open interest remains well below last year’s levels. It’s as though gold has been “churning” below the surface...just waiting for a breakout one way or the other.



Larger Chart

WTI: I’ve been out of the crude market for the past 2 months or so...waiting for an opportunity to get short. I’ve missed a great opportunity to trade the market from the long side because I’ve got a bearish bias...likely due to the fact that I’ve made money the past few years being short crude! Anyway, I waited and waited while the market rallied...apparently embracing the story that the cut back agreements by OPEC and some non-OPEC countries were not only “doing the job” but would be extended at the OPEC Nov 30 meeting. The “political uncertainty” in Saudi Arabia seemed to provide the “cherry on top” of hugely bullish sentiment and WTI rose to $58. I decided that this was “As good as it gets,” for WTI and got short. Prices fell $2 but then turned around and began to rally. I covered and went flat.



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