May 24, 2016
We are out of our Long Crude Oil positions
For various reasons (some “scientific”, some just gut feelings) we have exited all of our long Crude Oil positions as of today. I continue to see this as a market that will trade higher throughout the year, but with prices having almost doubled since their February low, I suspect some sort of setback might be what we see next…
in the Stock Market…
And an outright collapse in Treasury Bonds
In this business, the truth is, you never really know the timing…Things just start happening…sometimes seemingly out of nowhere (look at Soybean Meal recently), so consequently, much of the time you are just sitting and waiting…and often suffering as options you own are going down in value as the market does nothing…which has very much been the case lately in my Short Treasury Bond recommendation.
BUT…As a trader, there are times when your “antenna” present you with the idea that FINALLY the odds seem to scream at you, “It could be RIGHT NOW!”, which is where I am psychologically with both Stocks and Bonds…We are now into the 3rd week of May and my sense is, all the media bandwagon “logic” suggesting “Sell in May” (and invest happily ever after) has represented a kind of a selling induced lid on Equities for the first 3 weeks of the month…which has also represented a form of “safe haven” support for bonds…i.e., selling stocks and then buying bonds has kept Treasuries up.
BUT, by now, I would guess that just about anybody who WOULD “Sell in May and go away” has already SOLD…And the next thing we will see is all those sellers REGRETTING having done so as the market truly SOARS out of here…As I am forever repeating, this IS all just a giant mob psychology game wherein the masses (and this includes supposedly professional money managers as well) are ROUTINELY made to look like idiots...usually due to their continuing “faith” in the belief that the overwhelmingly wrong financial media “must know what they are talking about”…AND BELIEVE ME, THEY DON’T…
THE STOCK MARKET IS ESSENTIALLY ON ITS HIGHS BUT THERE ARE EXPERT “ANALYSTS” EVERYWHERE TELLING YOU TO SELL…AND BUY BONDS (??????).
SO I THEREFORE AGAIN REMIND YOU: HOW MANY TIMES DO YOU HAVE TO SEE ALL THE YAKHEADS, ‘ANALYSTS’, AND BROKERAGE HOUSE BOZOS STEER YOU IN THE WRONG DIRECTION TO KNOW THAT YOU SHOULD BE DOING PRECISELY THE OPPOSITE OF WHAT THEY ARE ALL RECOMMENDING?
Here is a brief sampling of what is I have been seeing somewhere…EVERY DAY…in the media…just in the past few weeks…
And yes, I highlighted that blurb about what the brokerage houses were recommending because I do find it significant that those “geniuses” are advising the public to sell…I spent my first 11 years in this business at one of those spin factories…and I tell you, in general, they DON’T know what is going to happen…Above all else, they are marketing organizations.
AGAIN…BUY STOCKS. SELL BONDS.
Here’s one way to go in stocks…
And as stocks take off…and the absurd fear the economy is on soft footing disappears…I believe the Bond market will be going straight in the opposite direction….
If you did this with the June contract…and you are now out of the market…You have GOT to get yourself to do it again…
We are still buying Eurodollar puts
SHORT TERM INTEREST RATES ARE GOING HIGHER…
and when they do, Eurodollars go LOWER
Again, this is not the Eurocurrency…Eurodollars are Dollars on deposit anywhere outside the United States…and the Eurodollar Rate is the interest rate pertaining to those dollars…In essence, the Eurodollar contract (the most heavily traded futures contract in the world), reflects International Short Term Interest Rates.
I AM BUYING PUTS ON THIS CONTRACT…AND THIS TRADE WILL BE SUCCESSFUL IF SHORT TERM INTEREST RATES DO GO UP…WHICH I OBVIOUSLY THINK WILL BE THE CASE…AND IN FACT, I THINK THESE RATES WILL BE GOING UP FAR FASTER THAN ANY OF THE TALKING HEAD SHEEP COULD EVER IMAGINE…BOTTOM LINE, LIKE THE BONDS, I THINK THIS MARKET WILL BE GOING TOTALLY IN THE TANK OVER THE NEXT 9-12 MONTHS.
For what it’s worth, I just had my two sons open commodity accounts, and had them put on this trade as an example of what a “smart trade” looks like. Plenty of time. Lots of leverage…and a mechanical device (my old 12-48 day moving average system) to put you in the trade…I’ve told them: “Buy the puts and forget you own them.”
THIS WHOLE INTEREST RATE TRADE IS A BIG DEAL GUYS. Yes, the last 3 sideways months have been tough but I will say it again…Don’t NOT be in it. DON’T “wait and see what happens”. For me, personally, I will not be out of this position for even a single day…
Call me if you want to talk about it.
The author of this piece currently trades for his own
account and has financial interest in the following derivative products
mentioned within: Mini Dow, Treasury Bonds, Eurodollars