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.”

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.

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.

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?

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.

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.

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.

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.

A great friend of ours, long term reader of the site, Indexjoe passed away today following a hard fought battle with cancer. It’s very hard for me to describe Joe, only that if you knew him you liked him and rooted for him to do well. He was a gentle soul, intelligent, and never had animosity in his heart. Inside The Pelican Room he was one of the more popular traders because of his dark humor and witticisms, the ability to really go along with my insane rants and make everything better.

I always felt a connection to him, which is a special trait in a person. I am sure that’s what made him so likable, the agreeable nature of a person of high intelligence bantering around with a group of troglodytes discussing the current events and all that comes with it.

We had great times trading together. He followed me into all of my zany themes, woke up with me at 4am to trade on Webull during the 2020 to 2021 bull run. He played the vax stocks, AI, NFTs, all of the cryptos, and had an excellent ability to curate my ideas and others. In a way, he was the best trader, able to smell out my great ideas from the ordinary.

Joe enjoyed to read some Hemingway, loved Big Band music, baseball, knew the NFL was gay, and really thought Trump was the best President of our era (joking). He was one of the gang, one of us, and I am deeply saddened to know his two young children and wife will grow old without him.

I am sorry Joe and I hope to see you again one day. You were someone that I will remember for the rest of my life.

Goodbye my friend.

I report to you at the pinnacle of trading success, closing +62bps in a session wrought with ruin for most traders. Like Pax Americana, it appears we are heading lower now, shareholders of $NVDA subjugated to immediate ruin.

Before you declare $NVDA to be a buying opportunity, understand that the stock is still up 10% for June and the NASDAQ itself higher by 5%. We can COLLAPSE 5% into the final days and still have a good month, in the broader sense of things. What I am suggesting to you is that the micro has nothing to do with the macro. If we are to outperform as traders, we must know when to pivot out from risk when markets go lower. It really is that simple.

If you can correlate with the up tapes at 0.9x and counter correlate when markets go through squalls, perhaps you too can pen a blog and possess the testicular fortitude to demand readers heed warnings and advice at risk of their own ruin.

Into tomorrow, I have a low beta portfolio hedged with $SQQQ and $UVIX, on the off chance that is $NVDA drops again tomorrow, people will start to lose their fucking minds.