This section you are in now is the future home of my newest product:
"Mad Hedge Technology Letter" - Available in the store starting February 1, 2018
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. 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
Global Market Comments
January 25, 2018
Fiat Lux
Featured Trade:
(GOLD IS BREAK OUT ALL OVER),
(GLD), (GDX), (NEM),
(THE 13 NEW TRADING RULES FOR 2018)
I'm sitting here at my Lake Tahoe lakefront mansion watching the Dow Average meander and go nowhere.
It is one of those perfect, picture postcard days, with a blue sky and cobalt lake. The fields outside are covered with snow crystals sparkling in the sunshine.
After the close, I'm going to have to shovel off my outside decks to keep the weight of the ice from collapsing them.
Those (TLT) puts are looking pretty good this morning, and are approaching the maximum profit point with only a few weeks to expiration.
In these tedious trading conditions it is more important for me to teach you how to avoid doing the wrong thing than pursuing the right thing.
I am therefore going to fill you in on my 13 Rules for Trading in 2018. Tape them to the top of your computer monitor, commit them to memory, and maintain iron discipline.
They will save your wealth, if not your health. Here they are:
1) Dump all hubris, pretentions, and stubbornness. It will only cost you money.
2) The market is always right, even if all the prices appear wrong.
3) Only buy the puke outs and sell the euphoria. Do anything in the middle, and you will get whipsawed.
4) With option implied volatilities so low, outright calls and puts are offering a far better risk/reward right now than vertical bull and bear vertical call and put spreads. It is also better to buy stocks and ETF's outright with a tight stop loss. This won't last forever.
5) If you do trade spreads, you can no longer run them into expiration the collect the last few pennies. If you have a nice profit take it, don't hang on to the last 30 basis points, even if it means paying more commission. The world could end three times, and then recover three times, before the monthly expiration date rolls around.
6) Tighten up your stop loss limits. Not losing money is the key to winning in this market. There is nothing worse than having to dig yourself out of a hole. Don't run hemorrhaging losses, like the (VXX) from $55 down to $25. It will get easy again someday.
7) Buy every foreign crisis and sell every recovery. It really makes no difference to assets here in the US.
8) Several asset classes are becoming untradeable for long periods (retail, the ags). Stay away and stick to the asset classes that are working (technology stocks and short bonds). This is not the time to get greedy and bet the ranch.
10) Turn off the TV and just look at your screens and data. Public entertainers have no idea what the market is going to do, especially if their last job was sports reporting. Their job is to get you to watch the ads for General Motors and TD Ameritrade.
11) As the bull market in stocks enters its ninth year, too many traders, analysts, and strategists have become complacent. You are going to have to work for your crust of bread this year. This is an earnings, technology, and cash flow driven bull, not a QE or tax cut driven one.
12) It is clear that more money was allocated to high frequency traders this year. That is driving the new, breakneck volatility, increasing stop outs.
13) Ignore Washington at all costs. The market doesn't give a fig what's going on there, to quote The Queen.
The hackers are getting better. Better change your password too, from 12345 to DKFGGIDKFOKBJGELXPEVJBKDLKFBBJFCJCKVLBKGTY69!, and hope that the 69 doesn't give you away.
Only The Real Gunslingers are Prospering in This Market
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
When John identifies a strategic exit point, he will send you an alert with specific trade information as to what security to sell, when to sell it, and at what price. Most often, it will be to TAKE PROFITS, but, on rare occasions, it will be to exercise a STOP LOSS at a predetermined price to adhere to strict risk management discipline. Read more
Global Market Comments
January 24, 2018
Fiat Lux
Featured Trade:
(WHY CHINA'S US TREASURY DUMP WILL CRUSH THE BOND MARKET),
(TLT), (TBT), ($TNX), (FCX), (FXE), (FXY), (FXA),
(USO), (OXY), (ITB), (LEN), (HD), (GLD), (SLV), (CU),
(THE NEW OFFSHORE CENTER: AMERICA)
??
Years ago, if you asked traders what one event would destroy financial markets the answer was always the same: China dumping it's $1 trillion US treasury bond hoard.
It looks like Armageddon is finally here.
Chinese sellers were a major factor in the recent break of ten-year US Treasury bond yields above 2.60%. They recently tickled 2.68% a new four-year high. With a breakdown like this you could be printing a 2.90% yield in a couple of months.
You may read the president's punitive duties on Chinese solar panels as yet another attempt to crush California's burgeoning solar installation industry. I took it for what it really was: a signal to double up my short in the US Treasury bond market.
For it looks like the Chinese finally got the memo. Exploding American deficits have become the number one driver of all assets classes, perhaps for the next decade.
Not only are American bonds falling in value, so is the US dollar (UUP) in which they are denominated. This creates a double negative hockey stick effect on their value for any foreign investor.
In fact, you can draw up an all assets class portfolio based on the assumption that the US government is now the new debt hog:
Stocks -Buy inflation plays like Freeport McMoRan (FCX) and US Steel (X)
Emerging Markets - Buy asset producers like Chile (ECH)
Bonds - run a double short position in the (TLT)
Foreign Exchange - Buy the Euro (FXE), Yen (FXY), and Aussie (FXA)
Commodities - Buy copper (CU) as an inflation hedge
Energy - another inflation beneficiary (USO), (OXY)
Precious Metals -Entering a new bull market for gold (GLD) and silver (SLV)
Real Estate - The ultimate hard asset with a massive demographic tailwind (ITB), (HD), (LEN)
Yes, all of sudden everything has become so simple, as if the fog has suddenly been lifted.
Focus on the US budget deficit, which has soared from $450 billion a year ago to $700 billion today on its way to $1.2 trillion later this year, and every investment decision becomes a piece of cake.
This exponential growth of US government borrowing should take the US National Debt from $20 to $30 trillion over the next decade.
I have been dealing with the Chinese government for 45 years and have come to know them well. They never forget anything. They are still trying to get the West to atone for three Opium Wars that started 179 years ago.
Imagine how long it will take them to forget about washing machine duties?
By the way, if I look uncommonly thin in the photo below it's because there was a famine raging in China during the Cultural Revolution in which 50 million died. The Chinese government never owned up to it.
Don't See Any Bond Buyers Here
While the Global Trading Dispatch focuses on investment over a one week to six-month time frame, Mad Options Trader, provided by Matt Buckley, will focus primarily on the weekly US equity options expirations, with the goal of making profits at all times. Read more