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.