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Great insights Duc, thanks. Do you see the upcoming US election with a possible (probable?) Biden win as a potential stumbling block for the stock market?
Trading the Trend
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A Biden victory would probably be ok'ish. Mr Bernie Saunders was the issue. Market would have tanked.
jog on
duc
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So finished work early and just checking through the news, because you just know that tomorrows price will be today's news....
Anyway: https://www.barchart.com/story/news...ns-for-stocks-on-wall-street-in-jumpy-trading
Banks surged after the Fed and four regulatory agencies announced they’re going to change a rule that has limited banks’ ability to make investments in such areas as hedge funds. The rule change could free up billions of dollars in capital in the banking industry.
So as far as the market trend is concerned, this is good news as the market needs (requires) the financials to be on board. No financials, dodgy market.
Of course, that comes with the caveat: don't invest in Hedge Funds that blow-themselves the f***-up. There have been a couple of spectacular blow-ups recently in the Quant Vol strategy space. Think LTCM all over again, just not as big (this time although the leverage was getting up there again).
jog on
duc
*Even more banking news: https://www.barchart.com/story/news...g-banks-from-buying-back-stock-caps-dividends
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There were quite a few positive press releases by the FED:
1. That the FED conducted a stress test for the banks and found that they are quite resilient: "The banking system has been a source of strength during this crisis," Vice Chair Randal K. Quarles said, "and the results of our sensitivity analyses show that our banks can remain strong in the face of even the harshest shocks."(https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625c.htm)
Let's hope the FED have got it right here, but of course the FED have got the bank's back no matter what happens.
2. There will be no requirement for banks to hold an initial margin for swaps within/between their banking group/organization: "Under the final rule, entities that are part of the same banking organization generally will no longer be required to hold a specific amount of initial margin for uncleared swaps with each other, known as inter-affiliate swaps." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625b.htm)
3. Prohibition for banking entities investing in hedge/private funds has been modified in these areas: "
- Streamlining the covered funds portion of rule;
- Addressing the extraterritorial treatment of certain foreign funds; and
- Permitting banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker rule was intended to address." (https://www.federalreserve.gov/newsevents/pressreleases/bcreg20200625a.htm)
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It will be interesting to see how the market reacts to and assimilates the news. This is sector specific and is news that was signalled well in advance of the actual outcome (news).
Clearly there are both positives and negatives. The initial run today was ahead of the unreleased news (ceiling on dividends etc) and may create some volatility tomorrow.
jog on
duc
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I think we are in for a bit of choppy market movements over the coming weeks with company data being released. I was shocked with the Wirecard collapse, Fintech is much riskier than many believe. I had a good reflection today on my portfolio asset allocation and I really need to construct a trade in the coming weeks. I think I will look at taking a few contracts in the 2nd or 3rd week of July.
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Some sector comparisons:
The out-perfomer: Tech. And the laggards.
Healthcare:
Medical Devices lagging.
Countries:
Mexico, seriously lagging.
jog on
duc
The out-perfomer: Tech. And the laggards.
Healthcare:
Medical Devices lagging.
Countries:
Mexico, seriously lagging.
jog on
duc
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You'll have volatility in individual names in response to earnings. Nothing new there. The volatility in a sector would require that the majority (major players) all report or provide poor guidance. Having a look at some of the sectors above, bad news will not really hurt the laggards. Positive guidance could however see them humming. Paradoxically, the risk is higher in the hot sectors and stocks, as expectations will be far higher and poor results or guidance could see price drops that could cause consternation.
Given that there are only a handful of hot sectors, I don't see earnings this time round creating volatility in the overall market, just due to the preponderance of under-performance of other sectors to Tech. etc. Therefore I would expect the trend to continue as the macro-fundamental picture remains unchanged for the moment and Energy will take some time to fix the issues that it has.
So overall I am sanguine.
jog on
duc
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Interesting how discretionary is up and staples are down.
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Why?
The idiots who purchased 100 toilet rolls and 50 packets of flour have calmed the f*** down. Now everybody wants to buy items that they were precluded from purchasing due to lock-downs etc.
jog on
duc
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That is where I will look at taking a few contracts (CFDs) on individual equities. I think there will be a few opportunities on both long and short positions when the reports come in. I have a couple of weeks to select my stocks and construct my trades.
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Herd mentality; once the herd is startled, that's it. The markets reflect it well. I suppose people will buy when big sales are on, when it comes to discretionary spending.
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I'm sure there will be (literally) hundreds of opportunities. Not a game I really play anymore. However, if I were to I would start with looking at the sector.
In the beaten down sectors I would be looking for longs only. There is no mileage in a beaten down stock getting even more beaten down and you also run into the value chaps. You can however (with some research) find beaten down that are ready to pop higher on just a sliver of good news and catch a potential short squeeze into the bargain.
Your shorts would be those that disappoint in the hot sectors. Given that you are already dealing with irrational, even bad results are viewed as a buying opportunity, so beware.
I might see what I can find, hypothetically speaking.
jog on
duc
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I won't be taking a huge position; as I want to keep my capital ready for better possible opportunities towards the end of the year. But I will post what I am considering to long/short in the coming weeks.
Anyway buddy I got to get ready to go out. Good chat
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I won't be taking a huge position; as I want to keep my capital ready for better possible opportunities towards the end of the year. But I will post what I am considering to long/short in the coming weeks.
Anyway buddy I got to get ready to go out. Good chat
So hypothetically, if you were wanting to find potential candidates:
(a) Go here to find out who is reporting and when: https://finance.yahoo.com/calendar/earnings?from=2020-06-28&to=2020-07-04&day=2020-07-01
(b) Go here looking for unusual activity: https://www.barchart.com/options/unusual-activity/stocks
(c) Match the two different searches looking for: a reporting date a couple of days out, where the stock hasn't yet moved and has unusual options activity to either the upside or downside, depending on your view or preference.
(d) See if the match makes for a compelling trade. If looking long, also check the short interest volume. If the stock is really heavily shorted, you may (if it pops enough) catch onto a short squeeze as a bonus.
jog on
duc
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Count BNPL companies in this risk.
over9k
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Chronus - the U.S jobs data is out on the third. Have your trigger(s) cocked. It could be as simple as some lowball "good till cancelled" orders already in place. I also like to layer them - some at -3%, some at -4%, and so on.
over9k
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Cross-post:
Here we go, we've had a record spike in virus cases and futures are in the toilet with the tech heavy nasdaq once again having an overwhelmingly better time of things:
and with all the banks deep in the red:
wall street is starting to now actively call for the already planned 2nd stimulus package to be brought forward:
I reckon the jobs data out next friday will be the big decider. If that's bad (and everything I've read says it's going to be) then more stimulus is a virtual certainty. That'll be the straw (or log) that breaks the camel's back. I'm now thinking about some put options.
Despite all of this, all of the european indexes are actually up significantly at the moment (which could just be a follow-on from yesterday's U.S bounce), but europe doesn't have anything near the virus problem that the united states does. We'll see what it closes at however.
Here we go, we've had a record spike in virus cases and futures are in the toilet with the tech heavy nasdaq once again having an overwhelmingly better time of things:
and with all the banks deep in the red:
wall street is starting to now actively call for the already planned 2nd stimulus package to be brought forward:
I reckon the jobs data out next friday will be the big decider. If that's bad (and everything I've read says it's going to be) then more stimulus is a virtual certainty. That'll be the straw (or log) that breaks the camel's back. I'm now thinking about some put options.
Despite all of this, all of the european indexes are actually up significantly at the moment (which could just be a follow-on from yesterday's U.S bounce), but europe doesn't have anything near the virus problem that the united states does. We'll see what it closes at however.
over9k
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Another cross-post
The one screencap which really says everything at the moment:
I know I keep saying this but tech and stay-at-home tech have had very different results and it's the stay-at-home tech that's driving the gains in tech overall.
The one screencap which really says everything at the moment:
I know I keep saying this but tech and stay-at-home tech have had very different results and it's the stay-at-home tech that's driving the gains in tech overall.
over9k
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Credit spreads are also way up, and I know that's a metric ducati would be thinking about.
