“I fear the day when the technology overlaps with our humanity. The world will only have a generation of idiots.” – Said German-born Theoretical Physicist Albert Einstein
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
September 15, 2022
Fiat Lux
Featured Trade:
(ON EXECUTING MY TRADE ALERTS)
From time to time, I receive an email from a subscriber telling me that they are unable to get prices on trade alerts that are as good as the ones I get.
There are several possible reasons for this:
1) Markets move, sometimes quite dramatically so. That’s why I include a screenshot of my personal trading account with every trade alert to reliably source the price for the readers.
2) Your Trade Alert email was hung up on your local provider’s server, getting it to you late. This is a function of your local provider’s lack of adequate capital investment in their own network and is totally outside our control.
3) The spreads on deep-in-the-money options spreads can be quite wide. This is why I recommend that readers only place limit orders to work in the middle market. Make the market come to you. Never buy at market or pay the offered side of the market unless you are in a stop-loss situation.
4) Hundreds of market makers read Global Trading Dispatch and many have attached algorithms to my service. The second they see one of my Trade Alerts, they adjust their markets accordingly. You may be fast, but you’re not as fast as an algorithm.
This is especially true for deep-in-the-money options. A spread can go from totally ignored to a hot item in seconds. I have seen daily volume soar from 10 contracts to 10,000 in the wake of my Trade Alerts.
On the one hand, this is good news, as my Trade Alerts have earned such credibility in the marketplace, with a 95% success rate. It is a problem for readers encountering sharp elbows when attempting executions in competition with market makers.
5) Occasionally, emails just disappear into thin air. We use cutting-edge technology, and sometimes it just plain doesn’t work.
This is why I strongly recommend that readers sign up for my free Text Alert Service as a backup. Trade Alerts are also always posted on the website as a secondary backup and show up in the daily P&L as a third. So, we have triple redundancy here. To sign up for the text alert service, please email support@madhedgefundtrader.com and put Text Alert Service in the subject line.
6) Options trades are now executed on 11 different exchanges. With two-legged spreads, one leg can be filled on one exchange while the second is filled on another. As a result, one online broker can show a spread trading through your limit other, while at another, it is ignored. I know this can be frustrating, but it is a fact of modern life.
The bottom line for all of this is that the prices quoted in my Trade Alerts are just ballpark ones with the intention of giving traders some name-picking and directional guidance. I pick the name and the direction and that is the heavy lifting when picking winning trades.
You have to exercise your own judgment as to whether the risk/reward is sufficient with the prices you are able to execute yourself.
Sometimes it is better to pay up by a few cents rather than miss the big trend. The market rarely gives you second chances.
Good luck and good trading.
John Thomas
“We have the intelligence of a moss growing on a rock compared to nature as a whole…Don’t get hung up on your views of how things should be because you’ll miss out on learning how they really are,” said hedge fund legend Ray Dalio.
Mad Hedge Technology Letter
September 14, 2022
Fiat Lux
Featured Trade:
(JOB MARKET WORKING AGAINST TECH STOCKS)
(TWLO), (META), (NFLX)
As the tech job cuts go from bad to terrible, how does this shake out the tech sector?
Just this morning, Twilio (TWLO) announced a major purge sacking 11% of its workforce to focus on reducing operating costs and improving margins.
Is this the end of it for the mighty tech machine?
Hardly so.
Tech companies will get more lean, efficient, and cutthroat which many might argue they should have been like that in the first place.
It’s somewhat true that tech business models got somewhat bloated in the era of euphoria.
Some unnamed big tech companies almost became like adult daycare centers.
Like overshooting in terms of revenue, development, and achievements to the upside in tech, and I acknowledge there was a lot to celebrate, I believe that the same works in reverse.
Staff at tech companies will be disposed of ruthlessly, and tech companies will most likely overcut jobs as a way to get their points across and show shareholders that they will flesh out costs during tough times.
Tough times in the big tech world mean less than growth margins, but they are still doing better than any small business who are outright going bankrupt.
Tech companies are in an advantageous position because the technology they harness can be used to scale up using software.
Less staff that manufactures higher productivity is an executive’s dream.
This time around, I firmly believe that automation will start to reach further up the employment chain because automation gets better with each iteration.
Humans also complain, get sick, need bathroom and coffee breaks, ask for promotions and raises when software code doesn’t.
We aren’t to the point of one CEO and the rest bots and software, but that’s the direction we are headed.
The silver lining for many of these fired tech workers is that the labor market is on fire. Although the unemployment rate ticked up to 3.7% last month, it’s still hovering at a 50-year low. The data is there – there are about two job openings for every unemployed person.
More than 50,000 tech workers have been laid off since the beginning of this year.
These fired tech workers will be able to find new jobs rapidly and in many cases with a juicy promotion, higher wage, and better benefits like 100% remote work opportunities, because there is still a huge shortage of qualified workers. Skills are fungible too.
Many will be able to pivot into the financial world and find jobs on Wall Street, who for the past generation have been losing talent to tech.
As interest rates rise, banks become winners.
Lastly, the pedestrian interest rate rises executed by the US Central Bank means that the job market will stay a lot hotter than first expected.
Even if they do get to 4% in the Fed Funds rate by the end of 2023, 4% is still historically low and companies will still be hiring albeit with a more measured approach and lower wages.
The slow pace of rises hurt tech because it allows the fired workers more time and better opportunities to get entrenched in a new sector while job offers are still plentiful.
The net result is the opposite of what the Fed wants which is more inflation as fired tech workers rotate into better-paying jobs spending even more money on goods and services.
This feeds into the higher inflation problem.
In short, this is a death-by-a-hundred-cuts sort of reaction for tech stocks. Tech stocks won’t explode to the upside until the workers can’t just re-up to a cushy healthcare job or Wall Street job like now.
Short every rally in wounded tech stocks like Facebook (META) and Netflix (NFLX).
“Don't chase a girl, let the girl chase you.” – Said Founder and CEO of Softbank Masayoshi Son
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