My definition of a fear trade is simple to understand. Much to my frustration, it took years to understand how to respond when markets go crazy. Especially when years of gains get wiped out in a matter of weeks or days even. If I had to sum up the response to fear, I’d fall back […]
Mean reversion trade ideas sometimes yield outsized returns. This type of trade has been around forever and still has a decent chance of success. Of course, this entirely depends on sound risk management practices. There is nothing worse than putting on a trade and losing money because you can’t admit you’re wrong. At the moment, […]
Sector rotation to start the year, not a surprise given the setup going into year end. However, the big question is whether or not the Fed will commit a policy error. Traders are on the watch for a 2018 Q4 disaster. Time will tell. To summarize, this week’s trading action is tied to the now […]
2022 stock market predictions are common to start a new year. Not surprisingly, Wall Street loves to parade out fund managers and analysts with their crystal balls and pixie dust. Well, I think this year I will do the same with the warning that I’m a flexible investor, so my opinion does change if the […]
US Treasuries are no longer risk free, but should investor’s ignore inflation and assume all is okay? For those who adhere to Modern Portfolio Theory (MPT), this question must be a real thorn in their side. After all, Harry Markowitz, who pioneered MPT, probably never thought the US 10-year Treasury yield would ever be 1.42%! […]
Bitcoin and blockchain, say what? I’m not a crypto bull or bear. I’m a crypto agnostic. As a Bitcoin investor dating back to 2012 I love to see the price exploding into the stratosphere, but what does up must come down, right? A market has yet to exist that can defy gravity forever. These days […]
Okay, how do you trade stocks using the VIX? Put this on a sticky note and paste it to your monitor. If stocks rise along with the VIX, take defensive measures. During October once we’d past the seasonal weakness, the VIX steadily declined as stocks rallied (first blue bar). This setup is music to my […]
Small cap stocks breakout of a year long trading range adding more fuel to the risk asset bull market in the United States. All year I was puzzled by the lagging small cap sector. But, finally this week the bulls bid up small cap stocks to new multi-year highs. I must admit that I didn’t […]
Treasury yield curve and inflation expectations look lousy and the stock market continues higher. The narrative around inflation is a hot topic on Wall Street and Washington these days. From the markets perspective, we are in the beginning stages of a tightening cycle. Surely, some will argue the Fed decision to taper yesterday is not […]
Inflation is a mixed bag of statistical noise. Today I want to highlight an interesting divergence between two key energy markets. The chart below shows to collapse in oil prices today after the FED announced it was starting to taper QE by 20 billion per month. To be sure, prices are pretty lofty at these […]
