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.