Below is the hourly returns for QQQ during the month of July, via Stocklabs. In other words, buy the morning dip and fade the close — get chopped in the middle.
IT BEHOOVES ME to see markets rally on this bad CPI number. Then again, markets ALWAYS want to trade higher and even in the worst tapes, save 2002 which was abysmal all year long, markets rip rally on anything that can be viewed as “good news.”
Today’s “good news” was the CPI data was “stale” since prices of commodities have tanked since then and this, potentially, could be the worst of it. In short, the inflation we are seeing is once again “transitory.”
I am not good at trading chop like this and should have much less exposure than I have now. I opened up 35bps, extended those gains with a quick GUSH trade and then ended up chasing the rally and now find myself with a curious blend of longs and shorts, but still bleeding out — now down 0.45%.
I told you yesterday Le Fly was finished, fin, because the market dynamics changed and it usually takes me some time to figure out the new algorithms to get back in sync. Last year I was out of sync from spring thru winter, plodding along with monstrous gains that had been achieved early in the year. While I am not “bleeding out” per se, only down 1.5% from the highs, I do not feeeeeeel in control.
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Chop then drop for a while, and repeat. Inflation is not easily born nor cured. Sure, demand will collapse but the root cause will still be alive and well until dealt with. Sandwiches and beer would be my recommendation.