While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
March 31, 2016
Fiat Lux
Featured Trade:
(APRIL 22 NEW YORK STRATEGY LUNCHEON)
(THE NEW COLD WAR)
(THE BEST FINANCIAL BOOK EVER)
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
Global Market Comments
March 30, 2016
Fiat Lux
Featured Trade:
(APRIL 21 BOSTON GLOBAL STRATEGY LUNCHEON),
(THE YELLEN PUT OPTION LIVES!),
(SPY), (TLT), (GLD), (FXY), (FXE),
(THE TAX RATE FALLACY),
(THE BEST TESTIMONIAL EVER!)
SPDR S&P 500 ETF (SPY)
iShares 20+ Year Treasury Bond (TLT)
SPDR Gold Shares (GLD)
CurrencyShares Japanese Yen ETF (FXY)
CurrencyShares Euro ETF (FXE)
Any monetary hawks hoping for an acceleration of the Federal Reserve’s interest rate policy had their hopes sorely dashed today.
Chairman Janet Yellen?s speech could not have been more dovish if it had been written by the most extreme deflationista.
Let me parse her words for you:
?greater gradualism?
??less favorable economic conditions?
?weaker foreign economies?
??downward drifting inflation expectations?
These sentiments all point towards a single possible conclusion. There won?t be another Fed interest rate hike until December, well after the presidential election.
Betting on Janet Yellen?s laser focus on employment at the expense of higher interest rates has been the surest bet you could made in the financial markets since her appointment in 2014.
Those betting on low rates triggering an upsurge in inflation were rightly spanked and had their money taken away from them.
The various asset classes made their predictable moves. Technology stocks (AAPL) and (FB), bonds (TLT), the Japanese yen (FXY), and the Euro (FXE) all rose. The dollar (UUP) and bank stocks tanked.
Gold (GLD) went up. But gold always seems to want to go up lately, no matter what the news is. It seems that the mere fact that an unknown is out of the way is cause for the barbarous relic to appreciate.
So you may be asking, ?Why on earth are you selling short the S&P 500 with this revelation.?
There is a method to my MADNESS.
The stock market has ridden higher for six consecutive weeks. It is now more overbought than at any time in history, with a staggering 92.5% of stocks ABOVE their 50-day moving average.
My belief is that I was not alone in my own dovish expectations, and that much of the rest of the market was expecting the same. That?s why we got a monster February-March rally, despite essentially no change in the economic fundamentals.
In order words, the dovish news is already factored into the price. No surprise here!
No Interest Rate Hike Here
I was pondering an FXE trade alert from MHFT today when my cell rang with a Berkeley, CA area code. Since I know a couple people in that part of the world, I answered, and it was none other than John Thomas.
Had I not heard his voice on the MHFT webinars, I would have thought I was being conned. But given that I?m in the last month of a trial run, he actually called to find out how I was doing with the service and what I thought.
Here?s the short version of what I told him.
I?m a pretty experienced investor, but definitely not sophisticated when it comes to using options, or for that matter, trading currencies and commodities.
My first trade with MHFT ? an (FXY) vertical call spread ? literally scared the hell out of me, so I used a tiny position size. I think I made around $900 ($400 more than my trial subscription, so there?s that).
But through the process of using John?s trade ideas, I learned. Fast. Nothing will help you grasp the potential of option strategies like doing them. And as I write this, I have multiple positions on courtesy of MHFT that are on track to deliver double digit percentage gains in a matter of weeks!
I can?t quite comprehend how he knows so many well-placed people, but he?s incredibly adept at grabbing insights from them, turning these into an investment thesis, and making it incredibly clear and actionable to his reader base.
One day he?s writing about a chat with a three star general and the next you?re buying a call spread on Palo Alto Networks. He connects the dots in a ridiculously useful way.
But it?s more than just the idea, it?s the timing of the idea. The world is full of people who can say ?hey, cyber-security is a big deal.? Or, ?wow, the euro is getting killed.? But the actual trade execution to profit from that in the near term? He?s freaky good.
I also love the defined exit strategy. Look, if you?re the most disciplined human on the planet and never let a bad trade turn into a long term ?investment,? more power to you.
I am not. I hate when I do it, but it?s happened more than once. With MHFT, the exit is well marked. You can?t miss it. Personally, I find that removes significant stress, not to mention risk.
Today, I was over at my local Schwab office ? before John called ? and was raving about MHFT. Not stark raving. Good raving. I?d be surprised if they aren?t signing up for a trial as I write this.
John, thanks for the call. That was a really nice surprise.
But more importantly, thanks for great work, thinking, and ideas. Enjoy your travels and I look forward to meeting you at one of your conferences.
Neil
Dublin, Ohio
?I can calculate the motion of heavenly bodies, but never the madness of crowds,? said Sir Isaac Newton, the inventor of calculus and discoverer of Newton?s Laws, who lost his entire fortune in a 17th century investment scam called ?the South Sea Bubble.?
As a potentially profitable opportunity presents itself, John will send you an alert with specific trade information as to what should be bought, when to buy it, and at what price. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Jim Parker, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more
While the Diary of a Mad Hedge Fund Trader focuses on investment over a one week to six-month time frame, Mad Day Trader, provided by Bill Davis, will exploit money-making opportunities over a brief ten minute to three day window. It is ideally suited for day traders, but can also be used by long-term investors to improve market timing for entry and exit points. Read more