18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,599 Blog Posts

July Off to a Rocky Start; Coal is Back

We have traded down just 1 time in July the past decade; but today is a not a good way to continue this trend. Aside from the breakout in coal, which I will get to in a second, we are seeing more distribution in many key areas of the market save the financials. It’s also worth noting US treasury yields are skyrocketing today, +11bps.

Aside from $AAPL, $TSLA, $AMZN and a handful of other mega cap stocks, we are in sell mode with breadth bogged down at around 30%. It should be noted, we haven’t enjoyed breadth of more than 60% since June 10th, which points to the fact rallies have been mean and narrow.

I am +25bps with 63% cash and a $TZA hedge ay 6%. I’m not particularly bearish, since I am net bullish. But the action speaks for itself and I see no reason to risk too much in a tape yielding so little.

On the matter of coal:

There was a report out today suggesting coal will benefit from the rapid scale out of datacenters, due to AI.

PMVirginia has long been known as ?“Data Center Alley,” with about 70 percent of global internet traffic passing through its servers, according to The Wall Street Journal. Dominion Energy said that because of data centers, its electricity demand in Virginia could quadruple and represent 40 percent of total demand in the state over the next 15 years. Georgia and Tennessee have also seen much data center construction and speculation. Utilities like TVA, Duke, and Dominion have announced plans to build more gas plants and keep coal plants open longer in those states, along with building renewables.

(rolls eyes)

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June 2024 is in the Books

I’ve been trading and writing as if everything were normal but I’ve felt really terrible all week, losing a friend to cancer. We were in touch often and I’d try to encourage him with videos via Instagram (my last video to him), and of course he’d participate in the juvenile banter inside Stocklabs. Like many of the people I enjoy spending my time with, they start off as my customers. In this regard, I am blessed.

A lot of people are downcast about the country and the direction it is taking. That’s the macro and I do not deny it. But the micro is filled with anecdotal acts of kindness. In spite of being a person seemingly teeming with rage, I often find myself in awe of the greatness of the people around me. I do believe people instinctively want to do good, at least most people, and life gets in the way of ruining it. People are also prone to sin and bad behavior compounds over time to exponential levels until reversion occurs.

I can take this blog in several different directions now, as I write with a stream of conscious. I’d like to keep it optimistic and point towards some of the better things to celebrate, such as my account closing near RECOURD highs. I bet you catamites thought I was finished and could not do it again, but I did.

I closed June up nearly 2%. Markets did better but most managers I know did worse. As a point in fact, my quant was hammered to dust for 5.7%; and I must admit, that took me by surprise. We seem to be undergoing a bit of rotation or pausing before legging up again.

Either way, markets tend to almost always trade up in July, so don’t expect much else.

Cheers to a great weekend and continuing to enjoy the best qualities of life.

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Locking in Gains

I took gains at the open and stepped aside into cash, +50bps for the session. My gains for June are 1.92% and I’ll try to push that to 2% before the day is out.

I like to cash up after the morning push because of the inordinate times markets have reversed lower after a strong open. I can accept losing money but the hardest pill to swallow is squandering gains.

The main topic of the day is the mental acuity of Joe Biden following last night’s train wreck debate with Trump. Anyone who is surprised hasn’t been paying attention. Biden has been like this for years.

I know this will sound controversial, but I’m not looking forward to a Trump admin. He’ll serve as a pressure valve for so many retarded boomer conservatives. If you want a true right wing movement, we have to have true right wing leaders. Trump does say a lot of things we like to here; but at the end of the day, he won’t be able to do much because of the useless nature of democracy or as some of you annoying retards will remind me: “a Constitutional Republic.”

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Rotation Day

Heading into tonight’s Presidential debates, we have a bullish tape, but bifurcated. There is now weakness in the large capped stocks and semis in favor of the smaller. The smaller companies are mostly domestic American companies, whereby the larger cap Nasdaq stuff are global.

This is not a rare divergence and we’ve seen the Russell crush the NASDAQ many times throughout history, just not recently. For the most part, when the dollar is weak it favors the multinationals, since they’re getting paid in appreciating currencies and the goods are cheaper. But we haven’t seen much of a move in the dollar. If anything it has been stronger.

Perhaps it’s a temporary blip, or perhaps the risk table is about to expand and include names that have been ignored. Either way, I closed very bullish with a 12% position in $TNA, but also hedged with a barbell position at 12% in $SQQQ, accompanied by a slew of longs. Within tech, there was rotation out from semis into software. You really need to keep on top of this stuff to know. Stocklabs is your friend and can help.

+17bps for the session, all going according to ze plan.

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Never Fear Losses

My worst runs are when I am reticent to lose money. This logic applies to the downside too, afraid to hedge a portfolio cresting higher or shorting into the hole. The market isn’t always going to go up and there will be periods when you’ll want to lock in profits. Some don’t due to tax concerns, not wanting to realize gains and pay taxes on them.

There is another way, if done with skill. You can pause your accounts from rising or declining by utilizing inverse ETFs. If you have an account 100% long with a beta over 1, you’ll likely need to place 20% of your account into $SQQQ in order to effectively hedge it. If you wanted a net short position, you’d need to do more. You can also get specific and hedge against certain sectors, such as biotech ($LABD), semis ($SOXS) or oil ($DRIP).

The bearish ETF with the most negative beta is $UVIX. But remember to bet with VIX is dangerous, since it’s rigged. You’d want to be long VIX during a black swan event, war, or general market collapse. A long time ago, I once had 30% of my book in VIX whilst undergoing an endoscopy and the markets CRASHED in what we now know as the “flash crash.” I made $5m in total on that trade and it was by pure luck.

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No Breaks in Trading

Let’s say you’re going through a rut and have really been sucking lately, unable to master the pivots and identify breakouts. Should you stop trading, ‘clear your mind’, and come back after an extended break?

The answer is and always will be NO, a very hard no.

When you were a boy and slumped at bat, did you stop playing baseball or did you work through it until you got into a groove again?

By “taking a break”, the only thing you’re achieving is disconnecting from the news flow and making it harder for you to plug in when you return. Whenever I got on vacation I always trade to stay in tune with things. If I am away for more than a few days I feel like the market is completely foreign and have to learn what’s what.

I’d argue your problems aren’t your mental state in need of rest, but your risk levels and process. Instead of clearing your head and coming back to repeat your same idiotic and retarded processes, why not work towards improving your methods?

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We are now down in the $SMH 4 of the last 5 days. In the event we continue to spiral, the market will most certainly panic out of these names. We have rotation out of semis and into SAAS today, as investors attempt a gambit at being cute. But nothing is cute when the sky is falling and the landscaped blacked by the fires.

Into the close, 25% cash, 6% short via $SOXS and the rest long +15bps total. My goal is to narrow my daily ranges, so that will entail constricting the flow of blood in either direction by reducing exposure and applying hedges.

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A Traders Tape

I tried to view the market negatively but kept stumbling upon some positive aspects of the session. I guess you could point to the $SMH down another 1.3% as proof we are selling off. But there are a myriad of other sectors on the up, such as software, electric vehicles, trucking and online retail. Look at $AMZN.

I pared all of my losers down and did take a quick trade in $SOXS because of the semi weakness, but I closed it out quickly for a profit. I find the best way to treat inverse ETFs are for overnight hedges and during quick scalps throughout the day. They are terrible for swing trades and an abomination for periods longer than a week. I figured if I can grab 100bps here and 200bps in them, it will eventually make up some loss ground in my longs and help me overachieve. There are times when I do nothing but lose money in them, mostly when I am skeptical of the upside and trying to time a pivot. But if you’re timing them correctly, they are excellent tools to help protect accounts during periods of uncertainty.

Market breadth is better than yesterday, but still not good sitting at 48%. We are in what I like to call a “traders market” with lots of cross currents and dependence on momentum in niche areas. In other words, if you’re not trading in Stocklabs you’re most likely lost.

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I’d Like Just One More Day

I ended up acquiesing to the market, caving into my bullish demeanor. I’d like very much for markets to swan dive lower, breaking necks along the way down. But, unfortunately, that doesn’t seem to be the case.

I gained 59bps in controlled trading today, played carefully as I said I would. I do, however, enter tomorrow with a bit of greed, fully long with 8% cash and even some $TQQQ to juice what I hope will be returns.

My gains for June are +1.5% and I’ll be happy with making 5% from now until the first of July.

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Semis Bounce; Markets Still Sick

Very strange tape today with the Russell down sharply and breadth at only 35%, yet all of the ‘cool’ semiconductor stocks are up. In addition to the semis, we have solid action in cryptos and the cryptos miners, select software stocks and everything else the fuck lower.

If you’re buying into this rally in the semis you are counting on strong hands to see it through, with the backdrop of HEINOUS pin action everywhere else. I took liberties to move to cash, other than 6% positions in $TSM for the semi strength barbell’d against a 6% position in $TZA to take advantage of the vanguard on the way lower.

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