Monday, July 18, 2016

A Sleeper

This is going to be a snoozer.  It always is when you have a strong uptrend and retail isn't actively involved.  At least when retail is involved, you will get irrational violent moves in random stocks and themes of the week.  Now it is just a FOMO central bank induced rally.  About the 100th iteration of that.

It takes a different mentality to go from being on offense:  aggressive and aiming for large gains to being on defense:  reluctant, passive, cautious, and playing not to lose.   When you have a good read on the market and fund managers are acting emotionally with some fear, then you get good volatility and more predictable moves.  I have always believed in VIP:  volatility improves predictability.  When fund managers are calm, making gains, and feeling very little pressure, the market will be slow and harder to predict.  The institutions make fewer mistakes and there are less openings to strike.  It is when the institutions are losing and feeling the performance pressure that you seem them getting fearful and making a lot of mistakes leaving good opportunities for those who are not under any of those kinds of institutional pressures.

Remember, in the equity large cap/futures/FX space, the drivers of the price action is 99% institutions.  So they are my primary opponents.  If they are playing their A game, it makes it much harder for me to make money.  Right now, they are calm and making few mistakes.  That is why my type of trading will not do that well during this time.  I often have a bearish lean (usually long bonds or short equity index) so this is definitely not my type of market.  Know your bias and if you are leaning bearish, it is probably better to come back in about 2 weeks and try again on the short side.

Going to be posting less as this market is sleepy and boring.  Not much to analyze in the daily action.  


Anonymous said...

TrendRambo: 2015 summer top was in July 20th. The bulls transformed into pigs. I would welcome a bit of seasonality to kick in for the rest of July ( probably asking for too much everything looks bullish now ; flagging )before reality sets in. CME fedwatch tool indicates rate hike for next week. Only question when will CNBC start talking about it. Market is still down 50% from 2030 highs)

Market Owl said...

There will be no rate hikes before the election. Yellen will not commit political suicide by tanking the markets to help Trump get elected. We should top out within the next 2 weeks. The top is close, I can definitely feel it coming soon.