Live from the Trading Desk

Markets & The Key Big Picture Influence

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on Monday, 18 June 2018 08:33

In this weeks Live From The Trading Desk Victor Adair on how Markets have changed under new Fed Chairman Jay Powell



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An Expected Week From Hell

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on Monday, 11 June 2018 13:59

Every Country has held interest rates way too low for way too long and the drama seemed to come to a head in Itally two weeks ago when it suddenly looked like the new Italian Government would collapse and set the tone for a Flat Futures market. Nervous Traders Hunkered Down For an expected " Week From Hell"




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USD strength “Blows Out” Setting Up Dam Breaks

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on Monday, 04 June 2018 07:20

Market Psychology had a classic “Risk Off” profile early this week as the “existential crisis” unfolding in Europe rallied the safe havens (USD, Swissy, Yen, Treasuries, German bunds) while the Euro, stocks, commodities and peripheral European bonds were dumped.  As the “existential crisis” diminished later in the week everything (with the exception of crude) reversed.

EUR/USD hit a 10 month low early this week...down~8% from the 3 ½ year highs made in February while EUR/CHF was down >5% in 2 weeks at this week’s lows. Gold hit an 8 month high against the Euro in mid-May.

The USD turned higher with “stealth strength” against 2nd and 3rd tier currencies earlier this year and then in mid-April the “dam broke” against the major currencies as widening US interest rate premiums started to really matter (see my April 21 TD notes.)

I think USD strength “blew out” this week and a correction is likely...but Friday’s very strong US employment report supports my view that the Powell Fed is going to remain committed to tightening monetary policy (raising rates and trimming the balance sheet) and that will support a higher USD into the 2nd half of this year.

Trading response: My accounts have moved from short to neutral Euro and I bought British Pounds this week looking for a bounce.




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The Bottom Line on Markets Right Now

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on Monday, 28 May 2018 08:27

Victor's long the US dollar based on the trouble triggered should the Italians leave the Euro. Also Short US Stocks, expects US Interest Rates to rise and is successfully Short Crude Oil.



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It Really Matter!

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on Monday, 23 April 2018 14:53

It doesn’t matter until it  matters, and then it really matters! US interest rates are higher again this week...short rates are at 10 year highs (2.45% on the 2 year) while the 10 year Treasury yield is 2.94%...very close to 5 year highs. The market is expecting US interest rates to keep rising and after months of, “It doesn't matter,” the currency market may be starting to realize that, “It really matters,” and the US Dollar is therefore rising against nearly all other currencies!

~ Starts at the 30:18 mark

My short term trading:

Stocks: I bought OTM S+P puts last Friday thinking that the market was rolling over. That night the “Allies” fired missiles at Syria. The muted response to that activity caused the S+P to gap higher Sunday afternoon and I covered my position for a small loss. I watched the stock market rally on low volume Monday through Wednesday and bought OTM puts on Thursday as the rally ran out of steam. My thesis has been that the sharp break from All Time Highs in late January was a “sign” that the character of the market had changed from a “buy the dip” environment to a two-way trading market and I’ve looked for opportunities to sell “bounce back” rallies that ran out of steam.

Currencies:  My thesis has been that USD (which has been falling for 16 months) was oversold and could have a good rally. I caught a good part of the Feb/March break in CAD (and gave some money back in the Mar/April rally!) I sold CAD following the dovish BOC event on Wednesday. I’ve been looking for other opportunities to buy USD. 

Crude Oil: I bought OTM WTI puts Thursday when the market made new highs and reversed. Part of the rationale on this trade is a bullish USD view. If indeed USD starts to rally then WTI may fall back from 3 ½ year highs. (Witness the July 2014 to February 2015 period when the USD soared while WTI tanked.)

Summary: at the end of the week my accounts are essentially short S+P, CAD, WTI, EUR and T-Notes.


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The Kenny Rogers School of Risk Management

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on Saturday, 14 April 2018 11:13

Victor shares how The Gambler would play today's volatile markets. Hint: You'd better be nimble. 

....Michael's Editorial: We Can Make 'Em Suffer. Why? Because We're The Government



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Victor Adair: Remaining Short Stocks

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on Monday, 26 March 2018 05:18

Live From the Trading Desk: Victor had a big week capturing the huge move down in the US Stock Market & profitably closing out a short Canadian Dollar position. He remains short the Stock Market, sees something going on in the Crude Oil market, & explains how he intends to manage risk - R. Zurrer for Money Talks


I started this week with short positions in CAD, Gold and the S+P. I took profits on the short CAD when it started to rally late Tuesday on news that the US was “softening” its NAFTA position on auto parts. I liquidated my gold position for a small loss on Wednesday when spot gold traded above $1325 and I remain short the S+P with a combination of option positions.

The Canadian Dollar tumbled >6.5% from the end of January to Monday’s lows. It had closed lower for 5 out of 7 weeks and hit a 9 month low. It just about registered a Weekly Key Reversal Up this week. I liquidated my short position on the NAFTA/auto news because the market had been very focused on Canada’s vulnerably to Trump’s protectionist bombast and any “let up” could trigger a rally in an oversold market. I was also puzzled by the bid in the crude oil market the last 2 weeks (in the face of stock market weakness) and I thought CAD could benefit from rising crude. The USD feels “heavy” ( the Yen is at its highest levels since Trump’s election) despite the HUGE American interest rate premium over other currencies and if the USD falls from here that would give CAD a lift.  I maintain a bearish view on CAD...I’m just not short at the moment.



Larger Chart

The gold market was under pressure last week and looked vulnerable...I had a bullish view on the USD so I bought gold puts. On Tuesday of this week gold closed at its lowest price in 3 months and I expected it was going to take a tumble...but it turned higher on Wednesday and I bailed out. This week the US Dollar Index registered a Weekly Key Reversal Down while gold registered a dramatic Weekly Key Reversal up.

I bailed out when gold started to rally because I believe that trade selection is only a small part of successful trading...risk management is much more important...and the first chapter in the book on risk management is, “Cut your losses and let your profits run.”



Larger Chart

The US stock market had “rolled over” Monday/Tuesday last week...a move I had been waiting for...so I bought S+P puts but by the end of the week I had a “low conviction” level on the trade because the market hadn't broken down. Thankfully I stayed with the trade and my unrealized gains are now many times the size of the loss I took on my gold trade.

My view on the US stock market has been that the big break from the late January highs was not a “Buy The Dip” opportunity but was likely the start of a “sentiment change” and I’ve been trading stocks from the short side. I’m of the view that the market makes the news, not the other way round. The “Facebook fiasco” the “changing of the guard” in the White House, the “Trade Wars” headlines, the new “Powell Fed” are all things that hit a market that was already on its way down from a very overextended top.



Larger Chart

The crude oil market rally the past 2 weeks has puzzled me. I’ve made some pretty good money trading WTI from the short side over the past 4 years and my bearish bias is hard to shake. I find it VERY interesting that crude has been rallying the past 2 weeks (WTI is up ~10% from last week’s lows) while the stock market has been falling. Since last summer WTI and the S+P have moved up and down pretty much in harmony...but that has changed dramatically.

I’m always watching inter-market relationships and when I see them change I ask, “Why is that?” Could it be that “somebody” senses that the new “Bolton/Pompeo” team in the White House is going to re-sanction Iran? (MBS was in Washington this week.) Is there some other supply side shock brewing out there? I don’t know, but my gut instinct...and the chart pattern...tells me to NOT be short WTI now.


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