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
23,534 Blog Posts

Unforgiving Chop

Yesterday the oils were sharply lower. If you were one of the people betting on $100 WTI — you got beaten to a pulp. Today, the oils are sharply higher on big dollar weakness. We have the 10yr down 4bps too, so it’s fantasy land for all of the commodity-fags.

But has it been enjoyable or even profitable?

Have a look at the price action in $RIG the past 3 weeks.

If you’re buying and holding — you have no concerns. But if you’re trading and attempting to catch alpha — you’re likely chopped up into tiny little pieces.

This is the sordid tape of today — small caps up today with NASDAQ lower and small caps wrecked tomorrow with NASDAQ higher.

Don’t lament over this price action like a little bitch. Sure there are rigged components to the market — but it’s all very methodical and can be gamed. For me, this isn’t a tape that I like to have a lot of exposure. I prefer a momentum based market over chop and if I trade heavily in chop — well then — I’ll get chopped. I’ll trade small, deploy hedges, and wait for the turn.

The great thing about being patient in a choppy tape is eventually a large break will happen and if you’re smart enough to guess the direction — you’ll cash in.

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  1. soupbone

    The reality of another upleg in bond yields will become apparent, eventually ending the chop.

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  2. soupbone

    On fossil fuels: the ESG brainwashing has been so deep that more time will be needed to get Wall Street back on board.

    When things get dropped like nuclear power was, after a couple diasters, it seems to count in decades.

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