I have been trading for a long time and guess that it is relative to the reader’s age, but I started in 1996 and right away jumped in the deep end of the pool at my firm that was literally on the forefront of the “day trading ” mania, and just like trading, I credit my timing, education and discipline for at least being in the game this long.
I am not saying I am any more or less profitable than the next trader and would be ignorant to think otherwise, as when I close out a position, winner or loser, I never forget that one (me) is only as good as the last trade.
A lot is going on now in the domestic and international markets and most of these occurrences are making history. I am not necessarily talking about an index or currency making new highs, which in due time I’m sure all do and rotate at one point, but I find myself confused, rare for me, as I usually have a plan to go on predicated on the very historical moves that I have seen in my career. However, what happens when markets/stocks/currencies/bonds are all acting in a volatile manner on their own? More to follow…
Now, why am I confused? And this is not an egotistical article where all my thoughts and opinions count, but as I said before, all modesty set aside, with my track record and experience I should have a clue though. By “a clue” I mean any definitive direction in the overall market and even more so, what will be a catalyst to get us out of a range.
If our traders and I are trading at all, we are most certainly waiting to react on stock/economic and/or any geo-political news at all and by no means are we trying to be cavalier or aggressive.
There are many reasons/theories that are circulating about what has brought up and is keeping the US markets at its current levels without some sort of correction that is even frustrating the bulls now. I am not an economist, but I believe the markets price in future earnings is driven by emotion (I will be subject to scrutiny), and I believe that “there is no other or better place to put one’s money.” Right now, with the INDU/SPX/IWM there ARE other places to put one’s money and with the lack of volatility within the equity markets COMBINED with every other financial instrument/market being more volatile than ever; I don’t blame em’.
We have the Greece debt talks still going on. The ECB meeting had concluded providing great “action” in the EU but actually calmed the markets a touch. Crude oil is in the danger zone, on which the debate for higher or lower prices seems more important than the very decline itself. As I write this, the Turkish market is down 7%. Shanghai composite is up 58% YTD, closing above 5,000 over the weekend. Somehow the DAX is in correction territory. You can talk to our FX guys at TradeviewForex about the currencies. And if I hear one more comment about the moves in the 10-year bond, I actually might start trading it!
Why Could This Be the Perfect Storm Then?
The perfect storm doesn’t mean I am picking a direction in the market. It means that, for the US, what can possibly happen as a catalyst that will give us more direction than just a more overall bullish sentiment? As traders, the direction of the markets are not as important as gauging your positions against the market, but when the underlying market gives little direction it is especially difficult to gauge. So as a trader, I believe the storm is brewing for the following reasons:
First, M&A activity is at the highest since 2007 and some say that a rash of mergers is a sign of a toppy market. But they also say that about the number of IPOs coming to market. It bothers me that no new exciting IPOs are coming to market to take advantage of current market levels.
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I am more old school than I like to admit, so I follow the Transports (IYT) probably more than I should, but it hasn’t failed me as yet and I am not going to abandon it now. However, I will admit that I am surprised that there hasn’t been a severe reaction in correlation with the IYT being some 10% off highs.
One of the leading groups during the first 5 months of the year, the biotechs (IBB), has just finished presenting at the ASCO conference, and many, justified or not, have made 10-50% moves, helping buoy the index and helping the Nasdaq. We have been playing such ‘movers’ as HRTX IMGN ONTY JUNO PBYI BMY.
The markets are absorbing the fact that there is going to be a rise in interest rates and certainty we know that helps the major banks as GS JPM WFC are all at multi-year highs, and even Citigroup (C) received a Goldman upgrade to ‘buy’ last week (hope it goes to $80 for all those stuck in it for a decade now).
In conclusion, and going forward, it is a quiet, “scheduled” week on the earnings and economic front, and by the action on Friday with SO much going on including the muted jobs number, it’s clear that it is a wait and see approach. It’s not fun but sometimes the best trade is no trade, so until we get confirmation, our traders focus on the movement of the futures overseas and keep trading our stocks in play.
Lately the plays have been more group related than individual. Trade well and be prudent. As equity traders besides putting up profits, our management skills, now more than in some time, our job is not to give any away.
Stocks myself and our team trading at TradeviewMarkets:
Solars: after JASO going public: CSIQ FSLR
ANYTHING Shanghai/Asian related: SINA JD QIHU WBAI BABA YOKU FXI
Cyber-Security Stocks: FEYE (after V deal) CYBR PANW
Biotechs: HRTX JUNO KITE IMHN ONTY PBTI
Special Situations: AMBA OPK URI GMCR NAV LE…..WYNN LVS MGM