I won’t start off my daily posts with the usual wordings because these are very unusual markets.
I will start off around hmmmm….let’s say 1500 hours yesterday. I’ve finished trading and most of my daily and necessary errands and I’ve been playing Call Of Duty for the last hour and a half when I decide to relax my eyeballs for a few by getting some drinks and a snack from the kitchen. I walk out and my phone is sitting on the countertop. Out of habit I pick it up to look at it. Lo and behold I have like 20 text msgs waiting for me. I break out into a cold sweat because I’m thinking something happened to someone I care about. Then I break out into an even BIGGER panic because my wife’s car probably won’t start again and she got out of work early and is now REALLY PISSED because she needs me to pick her up and I’m not responding. I know she’ll scream things like “why can’t you have your phone next to you?!” and “you were distracted playing XBOX One, weren’t you?!?” Now I’m here formulating a strategy against the impending argument we will have when I finally pick her up because I know she’s gonna bring up faults/past things like:
- why i can’t arrange the pillows on the couch back to the way they were after I watch TV in it
- why do I have to bring a bottle of beer in the shower – and leave it there
- why do I keep “looking in the direction” of the “flirtatious bitch” restaurant waitress who “obviously wants to have hot passionate sex with me”
(these obviously aren’t the EXACT things but you get the gist of it)
Between those two thoughts, I’m getting really really scared. Like scared in the way where you get pulled over by the police and you damn well know that your ass made the illegal U-turn just to avoid going another two miles down the road to the jughandle exit – yeah, it was that kind of feeling.
Fortunately, when I opened my msgs it was neither from a family member or my wife. It was from a couple of trading buddies telling me the Dow was down -1500 points and still tanking hard as f*ck. This was literally my reaction after I read my messages:
Ok, Ok. I’m not gonna sit here and pretend that the market LITERALLY CRASHING AND BURNING didn’t stop me for a second. It did.
But then the microwave bell rang and my burrito was ready.
Look, the Dow could lose half of its value in a day but as long as there is a market at 930 in the morning, I still have a job and I can still do it. I don’t give a rat’s d*ck what happens to the market on any given day. I just care whether or not I get to trade it.
So, let’s fast forward to today. When I logged into my trading software, I saw that the Dow was down -300. “Whatever”, I thought. I’m ready to go for 930. I should also add that I didn’t trade other assets because I wasn’t comfortable with any setups I saw. So, back to the cash open. As I was settling in, I realized something about the prices on both the ES and the NQ: they were both moving quickly up and down and – especially on the NQ and I suspect the YM – there were pockets of spreads that were wider than two ticks. This communicated two things to me: a.) nobody worth their salt is going to contribute to any momentum and b.) everybody is too scared and jittery to commit substantial capital to structure the market. I made the difficult decision not to trade this morning. While I have capital, deploying it in a market like this with a definitive strategy in mind (whether or not it was right) would be utterly irresponsible for myself and my wife. My suspicions were proven when in the span of 2 minutes after the opening bell, the YM erased its 310 point deficit to climb near 0. Now, someone could say, “wow Rhiese, all you had to do was buy and hold”, which is true. BUT, before the market did that, I saw the YM destroy every long from -310 to -350(60). If I had been in that with size, the damage to my account would have been catastrophic.
So now, we are nearing the end of this very different post and I am thinking of two things. One, I may take the rest of the week off until this whole market just calms. the. fuck. down. Two, I’m wondering what the cause/effects of these last couple of market sessions were. I personally, and this is just me, I personally think that this is a knee jerk reaction to Yellen’s retirement and what investors see as a rate hawk in Jerome Powell. While I feel that a tightening of rates is warranted, I would remind people (if I were a market pundit) that it’s not like the Fed will tighten by 75 or even 50 basis points. There’s no need to – so just chill, ok? And even with a rate hike on the table in the coming weeks, that’s just what it is…it’s on the table. And even if it were to happen, it’s not like business would shut down. That’s what the Trump tax cuts were for – so business & people can spend without the spectre of rates following them.
My other thing is that you now really have to look at the role that high-speed computer algorithms play in the market. While there was undoubtedly some economic reason behind the market’s rout, it’s no longer completely implausible that HFTs can exacerbate what is already a bad situation. But here’s where it gets interesting for me. Remember election night 2016? When EVERYBODY was harping on the markets sinking? Remember what happened the next morning when Trump got elected? Yeah. The market shot up like an Elon Musk rocket. While I know that this market situation is bad for people’s 401K’s, I would still be a buyer albeit a buyer after the “bloodletting” is over. Why? Because right now, that’s what the wealth management crowd is doing – well, maybe not right now. The rich guys behind closed doors, Republicans & Democrats, conservatives & limousine liberal actors and celebrities, are being told by their brokers – the ones normal folks don’t get access to – to buy or at least be prepared to buy stocks: because it’s stupid to bet against America. Sure you can win and everybody looks at John Paulson and says “well, he was short in 2008 and he made billions”. Well, yeah he got short a bunch of exotic derivatives that your retirement account couldn’t even afford if you wanted it.
Just for the record: I’M NOT RECOMMENDING ANYTHING. DON’T BUY OR SELL ACCORDING TO MY RECOMMENDATION. I’M JUST TALKING OUT OF MY ASS. DO YOUR OWN WORK – IT’S YOUR HARD EARNED MONEY. MAKE YOUR OWN DECISIONS AND TAKE RESPONSIBILITY FOR THEM LIKE AN ADULT ….. OR A REALLY SMART CHILD LIKE THAT KID IN THAT iPAD COMMERCIAL THAT ASKS: “WHAT’S A COMPUTER?“!
So, that’s just where I am now. I’ll look at the cash open again tomorrow and if I see the same thing, I just won’t waste my time. I’ll find some other assets to trade and hopefully the hysteria won’t spread to those prices especially if I see something I want to do in the softs (i.e. orange juice, cocoa, etc.). If not, then it really would be a good idea to just take the week off. There’ll always be a market, but you won’t always have capital.
I thank God that not only did I not lose money today, but that I didn’t get in trouble with the wife LMAO! I’m kidding, I love her very much and her positives FAR outweigh the things we fight about.