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The Kenny Rogers School of Risk Management


Posted by Victor Adair Interviewed by Michael Campbell

on Monday, 16 April 2018 07:41

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

“You’ve got know when to hold’em, know when to fold’em...know when to walk away, know when to run.” 

I started this week with all of my trades going against me. I was short CAD and NZD and long puts on Gold and WTI. I was stopped out of CAD and NZD early Monday and I liquidated the Gold and WTI puts early Tuesday. I’d been money ahead on everything at the end of the previous week so the net losses were pretty small...but they were losses all the same. BUT...it was a good thing I got out when I did...CAD and NZD jumped higher Tuesday/Wednesday, gold spiked higher mid-week and WTI just kept rising all week...gaining over $5 to hit 3 ½ year highs!

I make money when I’m going with the market...if the market is going against me I want out. The most important piece of trading advice I ever got was to cut my losses, and let my profits run.

The stock market felt “on edge” this week...who do you believe about Syria? Are the missiles going to fly? And then what? Where is Mueller going? What’s Trump going to tweet next? Did the “trade war” with China dampen down with Xi’s speech or is this just a lull before things get worse?  Price action was choppy and volumes were light.

The Canadian Dollar topped out with the US stock market in late January....fell ~5 cents to hit a 9 month lows in mid-March and has bounced back ~3 cents over the past 4 weeks. Maybe the market was too bearish at the mid-March lows...NAFTA worries seemed to lessen the past 2-3 weeks...the bounce back in the stock market seemed to help CAD and the 12% rally in WTI since mid-March has also helped. Western Canada Select has risen from ~ $34 mid-March to ~$51 now...a gain of ~50%!!   The Bank of Canada meets this coming Wednesday. (- Song Here)

dccsase

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The US Dollar Index hit a 3 year low as the stock market was making All Time Highs in late January. It has gone sideways in a narrow range since. Futures market speculative positioning is heavily negative the USD.

US short term interest rates continue to grind higher. The next Fed meeting is May 2. Speculative positioning in the futures markets is heavily negative short term interest rates.

My short term trading: I’ve had a good run the past couple of months but I was obviously “out of sync” to start this week so “going flat” was a good idea. One of my main trading ideas the past couple of months has been that the stock market looks toppy after a 9 year bull run. I’ve been shorting “bounce back” rallies that ran out of steam. I thought this week’s low volume price action looked like a weak “bounce back” rally and when the S+P made new highs for the month on Friday and then rolled over I bought OTM puts. The weak Friday close may simply be a case of people not wanting to buy ahead of the weekend...or maybe it signals weakness ahead...I don’t know. If the S+P trades up through 2,700 next week I’ll liquidate my put with a small loss but if the market drops below 2,600 it could build downside momentum.

 

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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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Gold & Precious Metals

Juniors are Close to Breaking Downtrend


Posted by Jordan Roy Byrne - The Daily Gold

on Monday, 16 April 2018 06:57

A few weeks ago we wrote that it may not be Gold’s time yet but a few recent developments suggest its time could be sooner than we anticipated. Although Gold failed to breakout last week, we should note the positive action in the miners. Over the past seven trading days the miners have strongly outperformed Gold. That includes the juniors, which appear very close to breaking out of the downtrend that has been in effect for over 12 months. 

In the chart below we plot the three major junior ETFs: GDXJ, GOEX (explorers) and SILJ (silver juniors). The juniors have trended lower since February 2017 but are now threatening to break trendline resistance. Since December 2017 the juniors have traded in an increasingly tighter and tighter range which indicates a break is coming very soon. Also, note how the 200-day moving averages are flat and no longer sloping lower. That reflects a mature correction and the potential for a new uptrend if the juniors break above resistance in a strong fashion. 

04152018jrstl

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There are a few other things worth mentioning. 



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Timing & trends

The Most Popular 3 Articles This Week


Posted by Money Talks Editor

on Saturday, 14 April 2018 07:54

DaToD-6WsAA-Fc41. Kiss The Jobs and Government Revenue Goodbye - along with Canada's Investment Reputation

$47 billion lost in government revenue - 800,000 man hours of work gone if the Trans Mountain pipeline gets scrapped. And for what? Best case scenario is .03 of a % reduction in global emissions. But don't worry - there's one big winner -  San Francisco based Corporate Ethics, who in 2008 launched and financed the campaign to landlock Alberta oil. Oh yeah, US oil producers are smiling too. 

 ....continue reading HERE

2. Short Sale of the Century

The Liberal's have gone a step to fare when they made it clear a citizen doesn't have right to Federal money if they disagree with the Prime Minister's point of view. 

....Click HERE for full comment

3. Climate Change Advocates Have Blown It

Misleading statements, hypocrisy, over the top predictions of eco-catastrophe, intolerance and disrespect for opposing views and a totalitarian like determination to stop anyone from questioning their agenda - too often those are the common of the Climate Crusaders. And they're hurting public support for taking effective action.

...read more HERE



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Timing & trends

Energy Curiosities - An Ongoing Photo Essay


Posted by Bob Hoye - Institutional Advisors

on Friday, 13 April 2018 11:00

thennow

ecur

The Liberal Federal Government is torn between the passions of mob politics and the dispassionate rule of law. It reminds of a donkey standing between two equally compelling stacks of hay.

The following by broadcaster Mike Campbell is a good intro to the latest pipeline fiasco:

mcam

 

....continue for Bob Hoye's Photo Essay:



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Gold & Precious Metals

Coup d'État That May Shake the World


Posted by Arkadiusz Sieron, Ph.D.

on Friday, 13 April 2018 07:47

Everyone focuses now on the chemical attack in Syria. Meanwhile, the most important turnover in the world remains mostly unnoticed. But we’re on guard. Let’s read our analysis of the key revolution of 2018 and find out the implications for the gold market.

Hawks Take Over the Fed

Are we going to write about Syria? North Korea? China? No. You already know everything you should about these geopolitical threats. The media bomb you with news about bombings, trade wars, nuclear trials, etc. But the key upheaval is taking place in silence, in the cool marble rooms of the Federal Reserve Banks. ‘The Hawkish Revolution’ – this is how the future historians will call it.

What is going on? We will tell you – but first read the key paragraph of the minutes from the recent FOMC meeting the Fed published yesterday.

Some participants suggested that, at some point, it might become necessary to revise statement language to acknowledge that, in pursuit of the Committee's statutory mandate and consistent with the median of participants' policy rate projections in the SEP, monetary policy eventually would likely gradually move from an accommodative stance to being a neutral or restraining factor for economic activity.

What does it mean? The FOMC members have started to consider the end of its accommodative stance. This is a real revolution, as the U.S. central bank has been supporting growth since the outbreak of the financial crisis. Now, for the first time since the Great Recession ended a decade ago, the Fed is talking about adopting a neutral or even tight stance. The possible consequences are enormous. More interest rate hikes are up ahead. Gold investors, be prepared!

Before we discuss the conclusions for gold, let’s analyze the rest of the latest minutes. Generally speaking, even without the remarks about possibly dropping the accommodative bias, the minutes had a hawkish tone. Why? Well, the FOMC members agreed that the nation’s economic outlook had recently strengthened:

All participants agreed that the outlook for the economy beyond the current quarter had strengthened in recent months. In addition, all participants expected inflation on a 12-month basis to move up in coming months.

Have you noticed something interesting? Look carefully. “All” – isn’t this a rare show of unity? We are all hawks now. Indeed:

Most participants commented that the stronger economic outlook and the somewhat higher inflation readings in recent months had increased the likelihood of progress toward the Committee's 2 percent inflation objective.

And another hawkish strike:

A number of participants indicated that the stronger outlook for economic activity, along with their increased confidence that inflation would return to 2 percent over the medium term, implied that the appropriate path for the federal funds rate over the next few years would likely be slightly steeper than they had previously expected.

Brace yourself for further hikes.

Fed Comments Trade Wars

Interestingly, the FOMC members discussed the potential impact of Trump’s trade wars. Although they downplayed the importance of U.S. tariffs, the central bankers worried about retaliatory trade actions:

A number of participants reported concern among their business contacts about the possible ramifications of the recent imposition of tariffs on imported steel and aluminum. Participants did not see the steel and aluminum tariffs, by themselves, as likely to have a significant effect on the national economic outlook, but a strong majority of participants viewed the prospect of retaliatory trade actions by other countries, as well as other issues and uncertainties associated with trade policies, as downside risks for the U.S. economy.

The Fed officials were also uncertain about the impact of the American fiscal policy. Generally, they believed that it should boost growth, but some question marks remained.

Tax changes enacted late last year and the recent federal budget agreement, taken together, were expected to provide a significant boost to output over the next few years. However, participants generally regarded the magnitude and timing of the economic effects of the fiscal policy changes as uncertain, partly because there have been few historical examples of expansionary fiscal policy being implemented when the economy was operating at a high level of resource utilization. A number of participants also suggested that uncertainty about whether all elements of the tax cuts would be made permanent, or about the implications of higher budget deficits for fiscal sustainability and real interest rates, represented sources of downside risk to the economic outlook.

Implications for Gold

Is gold doomed after the hawkish revolution? Well, the price of gold has indeed declined after the minutes were released, as one can see in the chart below.

Chart 1: Gold prices from April 9 to April 11, 2018.

gold-price-chart



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